Financing

Q: Where’s the money coming from to fund SCORE and the mega-dams?

A: We don’t really know!

SEB and the government have not released much information on how SCORE is being financed. Supposedly, 70% of funding for SCORE is planned to come from the private sector, 10% from government-linked companies, 20% from a mix of federal and state funds (Sovacool and Bulan, 2011). However, information about funders or potential funders is only partially accessible to the public.

 

Here are some things we do know:

 

SCORE is Expensive

With US$105 billion of costs until 2030, SCORE is Southeast Asia’s most capital-intensive project (Sovacool and Bulan, 2011). This figure, however, completely ignores social and environmental costs. Potential job creation for local communities is low.

 

REALLY Expensive

Bakun Dam was built over the course of two decades at a final official figure that was astronomically higher than projected. The dam was originally estimated to cost RM2.5 billion. While the official expenditure figures have risen to RM7.4 billion, researchers from The National University of Singapore calculate the cost of the Bakun Dam to be RM15.325 billion (Sovacool and Bulan, 2011). Construction began in 1994 and the dam was meant to be operational in 2003. It was not completed until 2011, but even today, it is not running at full capacity.

 

Investors be Warned!

Foreign investors should be warned about the risks of their involvement. Experience shows that Sarawak’s government and SEB routinely violate international standards they claim to follow, such as the UN Declaration on the Rights of Indigenous Peoples (UNDRIP) or the Equator Principles. Due to rampant corruption in Sarawak, SCORE is a corruption high-risk endeavor. The lack of involvement of international agencies such as the World Bank imply that international standards are not thoroughly applied in SCORE funding. Non-Malaysian investors must be careful and verify that their Malaysian business partners comply with the international standards that they claim to abide to. The UN Guiding Principles on Business and Human Rights state that companies have a responsibility to respect human rights in all of their business operations, even if they do not have the lead in a specific project.

 

Mega-Dams: Always Expensive, Never a Good Investment

A 2014 study out of Oxford University finds that, “Even before accounting for negative impacts on human society and environment, the actual construction costs of large dams are too high to yield a positive return.” This report is based on the most comprehensive economic analysis of large dams ever undertaken, and it offers devastating verdicts on the economics of large dams:

  • Large dams suffered average cost overruns of 96%. The degree of cost overruns tended to increase with the size of projects. Even without considering social and environmental costs, large dams on average don’t make economic sense.
  • Project implementation suffered an average delay of 44%. The implementation schedule does not include the lengthy lead time required to prepare projects.

 

Sources

Sovacool, Benjamin K. and Bulan. L.C. (2011) “Settling the SCORE: The implications of the Sarawak Corridor of Renewable Energy (SCORE) in Malaysia”, Energy Governance Case Study No. 04, page 5.

Sarawak Energy Berhad (2010) “Annual Report 2009”.

International Financing Review, 3 October 2009; Thomson One Database, “Tearsheet 2489382115”, Thomson One Database, 16 July 2009; HydroWorld, “Malaysia utility to issue bonds to fund 900 MW Murum”, HydroWorld, 28 March 2012
Sovacool, Benjamin K. and Bulan, L.C. (2011) “Meeting Targets, Missing People: The Energy Security Implications of the Sarawak Coridor of Renewable Energy (SCORE)“, in Contemporary Southeast Asia Vol 33, No. 1, p. 56, 58.

Financing Mega-Dams Film

Watch this 10-minute film to learn about the corruption involved in dam construction in Sarawak.

Corruption

Who wins with SCORE?

If built, the SCORE dams will displace tens of thousands of people and severely damage crucial ecosystems through inefficient and expensive means. Furthermore, there are more practical, cleaner, and cheaper alternatives. So why build the dams?

Private companies involved in construction and energy transmission stand to make gigantic profits from building the dams.

Many of these companies are controlled by relatives and friends of the governor and former Chief Minister of the state, Taib Mahmud. Taib has been in power since the 1970s. Companies associated with  Taib Mahmud, particularly construction conglomerate Cahya Mata Sarawak Berhad (CMS), are likely to be the main beneficiaries of public contracts in the framework of SCORE. In 2005, Transparency International called Sarawak’s Bakun dam, which was completed in 2011, a “monument of corruption”. Read the full report on corruption behind Cahya Mata Sarawak here.

Taib’s Legacy of Corruption

Research by the Bruno Manser Fund (BMF) has uncovered the vast dimensions of the Taib family’s illicit assests. Taib Mahmud’s fortune is directly related to the destruction of Sarawak’s forest through illegal timber sales and the corruption that comes with it.

Learn more about what former British Prime Minister Gordon Brown has called “probably the biggest environmental crime of our times” – the massive destruction of Sarawak’s rainforests by Malaysian companies – in Money Logging.

In 2013 Global Witness sent in undercover “investors” to see just how easy it is to profit from rampant corruption in Sarawak. Check out “Inside Malaysia’s Shadow State” to see what they found.

Corruption in Malaysia

Malaysia is currently involved in massive political scandals that are leading to economic instability and widespread protests. In 2015 allegations were made that a public organisation called 1Malaysia Development Berhad (1MDB) had been used to siphon state funds into the accounts of Prime Minister Najib Razak and people associated with him. Inquiries into the scandal have been met with more scandals, and those against the prime minister have been finding themselves the victims of threats and intimidation. Learn the juicy details from the BBC.