Clean energy powers economic development

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Torstein Dale Sjotveit, CEO Sarawak Energy Bhd

Sarawak Energy Bhd is has become a key player in the provision of hydropower in the state of Sarawak, in particular for companies operating in SCORE. Inside Investor asked Torstein Dale Sjotveit, the company’s CEO about the milestones achieved on this way.

Q: How much power is Sarawak Energy presently producing and what are its main power sources? How much comes from coal, hydropower etc?

A: In 2011, Sarawak Energy’s gross annual power generation was 7,346 gigawatt hours.  Our present generation mix is comprised of around 600 megawatts of gas, around 500 megawatts of coal and around 1300 megawatts of hydropower, most of which is sourced from the Bakun Hydroelectric Facilities. Our next development project, the Murum dam of 944 megawatts is now more than 75 per cent complete and will commence energy production in early 2014. In recent years, Sarawak Energy has made strong progress on an exciting transformation journey from being a stable, local and traditional utility company to a modern agile corporation supplying clean, competitively-priced and renewable energy in support of Sarawak Corridor of Renewable Energy, or SCORE. By the early 2020s, we expect that our generation mix will be around 75 per cent hydropower and that our generation capacity can be increased to around 9,000 or 10,000 megawatts.

Q: What is the penetration of the Sarawak population with electricity and what are the challenges to increase the reach of power supply especially in the interior regions?

A: At the end of 2011, around 84 per cent of Sarawakians had access to electricity.  This is projected to reach 92 per cent by 2013. In addition to our major plants, Sarawak Energy also owns 19 off-grid diesel and micro-hydro projects.  In 2010 Sarawak Energy set up a Rural Electrification Division to oversee the delivery of power to Sarawak’s rural population. Ensuring that rural communities have access to electricity is a key priority for us and we are working closely with the Sarawak State Government to achieve this goal.  Our focus is to extend our grid to reachable areas while hybrid systems employing renewable solar energy will be established for regions deemed too remote for grid connection. The biggest challenge is the sheer size of Sarawak. With a large remote interior that is sparsely populated, it makes road access and hence, electricity connection a very difficult task to be deployed within a short time frame.

Q: What is the company’s policy regarding the use of renewable energy?

A: Our goal is for Sarawak Energy to be the leading renewable energy company in South East Asia. Bulk hydropower is our most cost effective source of generation.  In the late 1970’s, the German SAMA consortium identified 155 sites with the potential for hydropower development, of which 51 short listed sites showed a combined potential capacity of around 20,000 megawatts. This vision is now becoming a reality. Of those sites identified, Bakun is now a world class facility, already producing power to new industries.  The Murum project is approaching completion and a further 11 potential projects are at various stages of investigation.  Of these, the Baram and Baleh projects of 1,200 megawatts and 1,300 megawatts respectively are the most advanced. International companies such as Tokuyama, Asia Minerals, Press Metal, OM Holdings and PLN from Indonesia have now signed firm agreements with Sarawak Energy for a combined total of 1,800 megawatts. We have also signed Term Sheet agreements with three customers for an additional 600 megawatts. The strength of demand from serious international players for Sarawak’s renewable energy is a testament to the attractiveness of investment opportunities presented to foreign investors.

Q: Sarawak Energy has recently opened bids for a number of new power transmission lines. What are the conditions for private bidders, and are you actively addressing foreign investors?

A: All procurement processes conducted by Sarawak Energy is aligned with accepted industry practices based on competitive selection processes to ensure the achievement of best value for Sarawak Energy and the people of Sarawak. Local and foreign contractors bidding to work on Sarawak Energy projects are subjected to rigorous selection processes prior to award of contract. These processes include assessment of technical capability and competency, adherence to quality, safety and corporate social responsibility requirements. These requirements are balanced against commercial considerations and the state government’s policy to support local content and develop new capacity among Sarawak based contractors. Central to Sarawak Energy’s selection processes is the requirement to ensure that all procurement activities are conducted on an impartial, transparent, confidential and ethical basis. Foreign investors are welcomed to explore investment opportunities in SCORE. The cost of doing business in Malaysia is generally competitive, complemented by supportive government policies and vibrant business environment in Malaysia – are all compelling factors for investors to consider Sarawak as the preferred destination for investment.

Q: Sarawak is currently building or planning to build a number of huge hydropower dams to meet the future energy demand of the state. However, there has been opposition from certain groups against the dam projects. What is your message to the critics?

A: Rapid growth, based on the concurrent development of multiple mega projects involving hydropower and coal fired technologies means that Sarawak Energy is having a greater and more visible impact upon the natural environment and local communities. In turn, we expect that Sarawak Energy will be subject to greater public scrutiny and higher expectations, not only by local stakeholders but from people around the world. Some of the criticism is based on sincerely held concerns, but most of our critics are motivated by politics. To address legitimate concerns in a professional way, we have been focusing on building our organisational capacity in Strategic Communications and Corporate Social Responsibility, or CSR. With regard to CSR, our strategies are designed to maximise benefit and minimise any adverse impacts of what we do for our community.

The four pillars of Sarawak Energy’s approach are that we create economic opportunities for Sarawakians; support partners in community investment; undertake our projects in a sustainable way, guided by relevant social and environmental standards; and demonstrate high standards of transparency and community engagement. In 2012, Sarawak Energy entered into our first ever partnerships with community organisations that share our priorities for community investment, which are largely focusing on education and young people, environment management and conservation, culture and heritage and community development and entrepreneurship.

Consistent with these objectives, Sarawak Energy took up membership of the International Hydropower Association, or IHA, in early 2010 to engage with the latest progress within the hydropower sector internationally. The IHA pursues a range of initiatives on hydropower sustainability and is also addressing the possible role and contribution of hydropower to climate change mitigation and adaptation. We are among the first hydropower companies in the world to apply the IHA’s hydropower sustainability assessment protocol. Sarawak Energy is using the protocol to make sure that we address social and environmental issues in a systematic and disciplined way, right from the inception of projects all the way through the development cycle until the commissioning and operation of the plants. From 20th to 25th May 2013, Sarawak will host the world’s most important gathering of hydropower stakeholders.  The 2013 IHA World Congress will bring together a range of key players from all over the world. Decision-makers and senior representatives from industry, civil society, international organisations and the finance sector will exchange views on the energy, water and climate change challenges and the solutions that hydropower can provide for sustainable development.

 

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Reading Time: 5 minutes

Torstein Dale Sjotveit, CEO Sarawak Energy Bhd

Sarawak Energy Bhd is has become a key player in the provision of hydropower in the state of Sarawak, in particular for companies operating in SCORE. Inside Investor asked Torstein Dale Sjotveit, the company’s CEO about the milestones achieved on this way.

Reading Time: 5 minutes

Torstein Dale Sjotveit, CEO Sarawak Energy Bhd

Sarawak Energy Bhd is has become a key player in the provision of hydropower in the state of Sarawak, in particular for companies operating in SCORE. Inside Investor asked Torstein Dale Sjotveit, the company’s CEO about the milestones achieved on this way.

Q: How much power is Sarawak Energy presently producing and what are its main power sources? How much comes from coal, hydropower etc?

A: In 2011, Sarawak Energy’s gross annual power generation was 7,346 gigawatt hours.  Our present generation mix is comprised of around 600 megawatts of gas, around 500 megawatts of coal and around 1300 megawatts of hydropower, most of which is sourced from the Bakun Hydroelectric Facilities. Our next development project, the Murum dam of 944 megawatts is now more than 75 per cent complete and will commence energy production in early 2014. In recent years, Sarawak Energy has made strong progress on an exciting transformation journey from being a stable, local and traditional utility company to a modern agile corporation supplying clean, competitively-priced and renewable energy in support of Sarawak Corridor of Renewable Energy, or SCORE. By the early 2020s, we expect that our generation mix will be around 75 per cent hydropower and that our generation capacity can be increased to around 9,000 or 10,000 megawatts.

Q: What is the penetration of the Sarawak population with electricity and what are the challenges to increase the reach of power supply especially in the interior regions?

A: At the end of 2011, around 84 per cent of Sarawakians had access to electricity.  This is projected to reach 92 per cent by 2013. In addition to our major plants, Sarawak Energy also owns 19 off-grid diesel and micro-hydro projects.  In 2010 Sarawak Energy set up a Rural Electrification Division to oversee the delivery of power to Sarawak’s rural population. Ensuring that rural communities have access to electricity is a key priority for us and we are working closely with the Sarawak State Government to achieve this goal.  Our focus is to extend our grid to reachable areas while hybrid systems employing renewable solar energy will be established for regions deemed too remote for grid connection. The biggest challenge is the sheer size of Sarawak. With a large remote interior that is sparsely populated, it makes road access and hence, electricity connection a very difficult task to be deployed within a short time frame.

Q: What is the company’s policy regarding the use of renewable energy?

A: Our goal is for Sarawak Energy to be the leading renewable energy company in South East Asia. Bulk hydropower is our most cost effective source of generation.  In the late 1970’s, the German SAMA consortium identified 155 sites with the potential for hydropower development, of which 51 short listed sites showed a combined potential capacity of around 20,000 megawatts. This vision is now becoming a reality. Of those sites identified, Bakun is now a world class facility, already producing power to new industries.  The Murum project is approaching completion and a further 11 potential projects are at various stages of investigation.  Of these, the Baram and Baleh projects of 1,200 megawatts and 1,300 megawatts respectively are the most advanced. International companies such as Tokuyama, Asia Minerals, Press Metal, OM Holdings and PLN from Indonesia have now signed firm agreements with Sarawak Energy for a combined total of 1,800 megawatts. We have also signed Term Sheet agreements with three customers for an additional 600 megawatts. The strength of demand from serious international players for Sarawak’s renewable energy is a testament to the attractiveness of investment opportunities presented to foreign investors.

Q: Sarawak Energy has recently opened bids for a number of new power transmission lines. What are the conditions for private bidders, and are you actively addressing foreign investors?

A: All procurement processes conducted by Sarawak Energy is aligned with accepted industry practices based on competitive selection processes to ensure the achievement of best value for Sarawak Energy and the people of Sarawak. Local and foreign contractors bidding to work on Sarawak Energy projects are subjected to rigorous selection processes prior to award of contract. These processes include assessment of technical capability and competency, adherence to quality, safety and corporate social responsibility requirements. These requirements are balanced against commercial considerations and the state government’s policy to support local content and develop new capacity among Sarawak based contractors. Central to Sarawak Energy’s selection processes is the requirement to ensure that all procurement activities are conducted on an impartial, transparent, confidential and ethical basis. Foreign investors are welcomed to explore investment opportunities in SCORE. The cost of doing business in Malaysia is generally competitive, complemented by supportive government policies and vibrant business environment in Malaysia – are all compelling factors for investors to consider Sarawak as the preferred destination for investment.

Q: Sarawak is currently building or planning to build a number of huge hydropower dams to meet the future energy demand of the state. However, there has been opposition from certain groups against the dam projects. What is your message to the critics?

A: Rapid growth, based on the concurrent development of multiple mega projects involving hydropower and coal fired technologies means that Sarawak Energy is having a greater and more visible impact upon the natural environment and local communities. In turn, we expect that Sarawak Energy will be subject to greater public scrutiny and higher expectations, not only by local stakeholders but from people around the world. Some of the criticism is based on sincerely held concerns, but most of our critics are motivated by politics. To address legitimate concerns in a professional way, we have been focusing on building our organisational capacity in Strategic Communications and Corporate Social Responsibility, or CSR. With regard to CSR, our strategies are designed to maximise benefit and minimise any adverse impacts of what we do for our community.

The four pillars of Sarawak Energy’s approach are that we create economic opportunities for Sarawakians; support partners in community investment; undertake our projects in a sustainable way, guided by relevant social and environmental standards; and demonstrate high standards of transparency and community engagement. In 2012, Sarawak Energy entered into our first ever partnerships with community organisations that share our priorities for community investment, which are largely focusing on education and young people, environment management and conservation, culture and heritage and community development and entrepreneurship.

Consistent with these objectives, Sarawak Energy took up membership of the International Hydropower Association, or IHA, in early 2010 to engage with the latest progress within the hydropower sector internationally. The IHA pursues a range of initiatives on hydropower sustainability and is also addressing the possible role and contribution of hydropower to climate change mitigation and adaptation. We are among the first hydropower companies in the world to apply the IHA’s hydropower sustainability assessment protocol. Sarawak Energy is using the protocol to make sure that we address social and environmental issues in a systematic and disciplined way, right from the inception of projects all the way through the development cycle until the commissioning and operation of the plants. From 20th to 25th May 2013, Sarawak will host the world’s most important gathering of hydropower stakeholders.  The 2013 IHA World Congress will bring together a range of key players from all over the world. Decision-makers and senior representatives from industry, civil society, international organisations and the finance sector will exchange views on the energy, water and climate change challenges and the solutions that hydropower can provide for sustainable development.

 

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