Archived press release

Abb pulls out as bakun dam flounders

4 September 1997

Friends of the Earth renewed calls potential investors to avoid investing in the Bakun Hydroelectric Project (HEP) as Swiss/Swedish company ABB pulled out of the controverisal project in the Malaysian state of Sarawak due to a contractual dispute over who would cover cost overruns with the project's leading company Ekran Berhad [1]. Following today's announcement by the Chairman of the Bakun Hydro-Electric Corporation Berhad that "other arrangements for completing the...project" will have to be made there was an immediate drop in ABB's share prices.

Friends of the Earth has long been critical of the financial viability of the project as well as the terrible environmental and social impacts it will have. In letters to banks and potential investors across Europe and the Far East FOE has warned of the risks involved in backing the controversial Bakun HEP. An independent financial report [2] councludes that the project "appears to carry far greater risks" than other private power projects in Malaysia and elsewhere [3]. The Co-op Bank and Dutch bank ASN have written to FOE stating that they have no intention of investing in this project.

Despite being a leading company for the World Business Council for Sustainable Development, ABB has just signed a contract to supply $740m worth of equipment for the Three Gorges Dam in China [4].

Sarah Tyack of Friends of the Earth says

"This cancellation of the contract with ABB provides the Malaysian Government with a good opportunity to recognise the enormous economic, environmental and social costs with pushing ahead with this monsterous project. ABB and the industry at large should start to realise the true implications of large scale hydroelectric projects. ABB should learn from their experience with the Bakun farce and withdraw from the Three Gorges Dam immediately.

The unknown quantities of the impacts of the project along with overrun costs and performance estimates would tell anyone in the City that this will not make a wise investment choice".

ENDS

NOTES TO EDITORS:

[1] The Bakun HEP, which is due for completion in 2002, will be constructed across the Balui River in Sarawak. It will supply electricity to the Malaysian Peninsular 650 km away and will involve flooding of nearly 70,000 hectares of forest and indigenous peoples' land and the forcible replacement of nearly 10,000 people. The Bakun HEP is a highly controversial project which has been criticised for its potential environmental and social impacts by human rights, indigenous and environmental groups in Malaysia and worldwide since it was first proposed in 1962. The project was revived in the 1980s, but was shelved in 1990, a decision which the Malaysian Prime Minister, Dr Mahathir, said was "proof that Malaysia cares about the environment". The Prime Minister then supported the move to take it forward again in 1992.

[2] "Bakun High Dam: High Risk?" Published by Delphi International Ltd, 36 Great Queen Street,London, WC2B 5AA, UK Tel 020 7404 2963

[3] These risks include "probable" cost overruns, a "substantial risk" that the dam will produce less power than forecast; and possible long term technical problems with reservoir sedimentation and the unprecedented 670 kilometre-long undersea power line between Sarawak and peninsular Malaysia.

[4] If completed, The Three Gorges Dam would stretch nearly a mile across and tower 575 feet above the bed of the Yangtze. Its reservoir would stretch over 350 miles upstream and force the displacement of 1.3 million people. It would be the most powerful hydroelectric dam in the world. Construction began in 1994 and is scheduled to take 20 years. It has been dubbed the world's most destructive hydroeletric project and is projected to cost betweeb $30-$50 billion.

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Published by Friends of the Earth Trust