30 August, 2002 (Business Times) - BAKUN hydroelectric dam civil works’consortium leader Sime Darby Bhd may seek the support of four sistercompanies from Permodalan Nasional Bhd (PNB) in supplying palm oil as partpayment to the Chinese partner in the project.

China National Water Resources and Hydropower Engineering Corp willreportedly be paid for its share of the RM1.788 billion contract partly inpalm oil.

Sime Darby, which produced about 315,000 tonnes of crude palm oil lastyear, will not be able to meet this obligation on its own, an industrysource said.

“The amount of palm oil involved is huge, running into millions of tonnes.Sime Darby may turn to other companies under PNB to meet the shortfall,”he told Business Times.

He was referring to Kumpulan Guthrie Bhd, Island and Peninsular Bhd,Austral Enterprises Bhd and Golden Hope Plantations Bhd.

PNB owns 15.51 per cent of Sime Darby, 46.01 per cent of Guthrie, 71.51per cent of Island and Peninsular, and 9.6 per cent stake in Golden Hope.

Austral is 57.81 per cent controlled by Island and Peninsular.

It was announced last Saturday that Sarawak Hidro Sdn Bhd, the Bakun dam’sproject manager, has awarded the contract to the Sime Darby-ledconsortium.

The consortium, called the Malaysia-China Hydro Joint Venture (MCH JV),and headed by Sime Darby subsidiary Sime Engineering Sdn Bhd, is taskedwith designing and executing the dam’s main civil works.

MCH JV is made up of Malaysian companies grouped under Sime Joint Venture(Sime JV) and China National.

Sime JV — whose members are WMAI Joint Venture, Sime Engineering andEdward & Sons Sdn Bhd — owns 70 per cent of MCH JV and the Chinese partner30 per cent.

WMAI JV in turn comprises equal partners MTD Capital Bhd, WCT EngineeringBhd, Ahmad Zaki Resources Bhd and Syarikat Ismail Ibrahim Sdn Bhd.

The equity breakdown for Sime JV is Sime Engineering 51 per cent, WMAI JV44 per cent and Edward & Sons 5 per cent.

Bernama reported Wednesday that part of the payment for the contract workon Bakun is expected to be made in the form of palm oil.

Sarawak-based Edward & Sons chairman and managing director Stanley Ajangsaid: “I am told that is the intention”.

Such an arrangement would also help curb the outflow of foreign exchange.

Sime Darby chief executive Tan Sri Nik Mohamed Yaacob could not be reachedfor comment.

The source meanwhile said a counter-trade deal would augur well for thetrade ties between Malaysia and China.

China has been the third biggest buyer of Malaysia’s palm oil for someyears. In 2001, its uptake was 1.28 million tonnes worth RM1.24 billion.

Palm oil counter-trade is not new to Malaysia. The country hassuccessfully undertaken a number of such deals before, including for thesupply of locomotives and submarines.

Similar pacts are currently being negotiated for fighter jets and battletanks.

Sime Darby shares closed 10 sen lower at RM5.10 yesterday. Golden Hope wasdown 6 sen at RM3.16, while Austral and Guthrie traded unchanged at RM3.18and RM2.28, respectively.

Island and Peninsular shares were also unchanged at RM2.28.