Allegations abound: are nepotism and corruption behind the Sabah coal plant?
Allegations of government
corruption and corporate kick-backs are swirling around a planned 300 MW
Chinese coal plant in the Malaysian state of Sabah.
While the plan to build the coal plant in Lahad Datu Bay has come up
against strong and unrelenting grassroots opposition, the federal
government continues to largely turn a deaf ear to opposition, arguing
that the energy plant is necessary to power Sabah and stop blackouts.
However, critics say the coal plant—which is to be built on the edge of
the Coral Triangle and 20 kilometers from Tabin Wildlife Reserve—will
damage fish stocks with chlorine and thermal discharges, upend the lives
of locals dependent on fishing, and devastate eco-tourism in the region.
In addition, the coal plant goes directly against Prime Minister Najib Tun
Razak's agreement at Copenhagen to reduce the country's carbon emission
intensity by 40 percent by 2020.
Despite these clear concerns—and increasing opposition—sources who spoke
on the condition of anonymity say the plant has continued to move ahead
due to government nepotism, corruption, and kick-backs. In fact, sources
say the federal government has already paid out nearly a quarter of the
cost of the coal plant to the contracted company, China National Electric
Equipment Company (CNEEC), and that at least one official has seen a
significant kickback from this.
Woe to journalists
Malaysia is not an easy place to find answers about behind-the-doors
government deals. In fact, finding answers in some situations can actually
be against Malaysian law.
The circle denotes the coal plant. Tabin Wildlife Reserve is to the west,
Semporna (Tun Sakaran Marine Park) is to the south. Map courtesy of Green
"Malaysia has some laws that make it almost impossible for journalists to
find out stuff about people in power. Reporters here can be charged if
they do get hold of info, and if it is published," a source told
mongabay.com, adding that such charges fall under Malaysia's Official
Secrets Act. A citizen can also be held for up to 60 days without seeing a
courtroom if it's said they threatened national security, according to the
Internal Security Act.
Newspapers are also tightly tied to the government in Malaysia. Under the
Printing Presses and Publications Act, newspapers must be issued annual
permits by the Malaysian Home Ministry. If a paper reports on something
the government is unhappy with it can order the paper to close down within
"This is why investigative journalism is weak in Malaysia," another source
When asked why Malaysian newspapers are ignoring these connections,
another source stated simply, "No one dares".
Given the difficulty of obtaining information that the government doesn't
want aired, Malaysians are often left with speculation, rumor, and hearsay
to offer explanations behind their government's action. This is the case
with the Sabah coal plant.
The coal plant will be built on the northern edge of Lahad Datu Bay. Photo
by: Cede Prudente.
"It is like an open secret, but no one can confirm," a source who wishes
to remain anonymous said.
Is corruption behind the Sabah coal plant?
Much of the current speculation centers around Tan Sri Leo Moggie, the
chairman of Tenaga Nasional Berhad (TNB) and former MP for 30 years. TNB
is the federal energy company which is pushing the coal plant. When a
second location for the coal plant was rejected—the plant has been moved
once before—Leo Moggie took out an ad arguing in several newspapers in
Sabah arguing for a coal plant.
"The irony is he signed off simply as 'Leo Moggie.' there was no mention
of him being the chairman [of TNB], or that TNB wanted this plant. This of
course, raises questions."
Locals have been told that Leo Moggie received a sizable kickback from the
deal with China National Electric Equipment Company (CNEEC) for the coal
"It was speculated that a payment of RM 400 millions been paid upon
agreement signed. Some said half of that amount had been kicked back to
[Leo Moggie]. One minister said only 10 percent. God knows," a source
In addition to this allegation, sources say that the deal for the coal
plant is aiding Leo Moggie's family.
"We suspect his family members control the import of coal from
Kalimantan," said a source. According to published plans, the coal plant
will be powered by mines in Indonesian Borneo.
Another source adds that, "I have heard also that his son, Michael Kallum
Moggie, is involved in some coal mine deals in Kalimantan."
Several people contacted in connection with this story stated that while
nepotism was officially frowned upon in Malaysia, it is commonly
To date Malaysian newspapers have not reported on any of these
allegations. However, given that Leo Moggie is a board member of the New
Strait Times, Malaysia's biggest newspaper, this is perhaps not
Sources also say that the Malaysian government has already paid China
National Electric Equipment Company (CNEEC) 400 million Malaysian ringgit
($125 million) in order to build the power plant.
"They probably signed it thinking that the project would be approved. Coal
is after all listed in the country's five-fuel policy," said a source.
Yet the price of the coal plant continues to rise. When first proposed it
was estimated a RM 1.1 billion then RM 1.3 billion for the second site,
and now RM 1.7 billion. When asked why the plant had jumped RM 400 million
from one site to the next, the sources had different answers. One said the
rising price of raw materials was largely to blame, while the other said
the money was used "[by the government] for buying favors or supports,
even speculated for the [Barison Nasional, Malaysia's ruling party]
campaign of last election."
To date, many details of the project remain obscured by government and
corporate silence. No one knows if the total cost includes the cost of
building a transmission line, or the route this transmission line will
follow, though it could very possibly cut through rainforest. While the
coal will be supplied by TNB Fuel Supplies, officials have also not shared
which coal mines in Kalimantan will supply the plant or how long they plan
to export coal from Indonesia. Environmentalists fear that if the plant
goes ahead, it will spur coal mining in Sabah's own backyard, upending the
state's last pristine ecosystems.
According to local activists, it doesn't have to be this way. Compelled by
social, environmental, and economic concerns, the organization Green SURF
(Sabah Unite to Re-Power the Future) recently hired the Renewable and
Appropriate Energy Laboratory (RAEL) at the University of California
Berkeley to conduct an energy audit for Sabah. The audit found that power
from either biomass or hydropower could provide the same power at a
competitive price with coal. Geothermal and solar were slightly more
expensive, but greener options.
However, if the allegations of government corruption are true—and we may
never know for certain—then convincing the government to pursue a
different course may prove next-to-impossible even for the most
Malaysia preparing to take big step backward on energy policy
(08/13/2010) I write to you as a deeply concerned and saddened citizen of
Malaysia. For most of the 45 years of my life, I have been proud to be
Malaysian. Recently, I have become heartbroken to be Malaysian. I am
profoundly grateful to write this with the support of both my local
communities in Sabah, Malaysian Borneo and California, U.S.A., and a
larger world community. That said, I take full ownership of and sole
responsibility for the views articulated in this letter; I express them
from my stand as a mother, an earth citizen and a leader.
Environmental assessment for Borneo coal plant riddled with errors
(08/03/2010) The Detailed Environmental Impact Assessment (DEIA) for a
proposed coal plant in Sabah is full of holes, according to activists with
the organization Green SURF (Sabah Unite to Re-Power the Future), which
opposes the plant. The official environmental report from Lahad Datu
Energy lists species not endemic to Borneo, mistakes the nearest ecosystem
to the coal plant, and confuses indigenous groups. Even more seriously,
the DEIA leaves out information on the coal plant's specifics and possible
Fishermen express doubts about coal plant overlooking their fishing
(06/13/2010) Local fishermen in the Malaysian state of Sabah are uncertain
of their future, if the government pushes ahead to build a 300 megawatt
coal power plant. They have been told they will be moved from their
current seaside village to one deeper inland, and while the coal plant
will provide manual labor work in its building stages, the fishermen
express doubt about the impacts over the long-term effects of the coal
plant on their livelihood. "Someone mentioned that maybe we have to move
to Sungai Merah, which is quite far from our village. We are also worried
because Sungai Merah is not next to the sea like [our village] is," local
fishermen, Ali Hia, told Green SURF and Save Sandakan members—two local
organizations opposed to the coal plant—who recently visited the seaside
village of Kampung Sinakut, site of the proposed coal plant.
Photos reveal paradise-like site for coal plant in Borneo
(05/21/2010) With the world's eyes on the environmental catastrophe in the
Gulf of Mexico, many are beginning to ponder the rightness of not just
America's, but the world's dependence on fossil fuels. Yet large-scale
fossil-fuel energy projects continue to march ahead, including one in the
Malaysian state of Sabah on Borneo to build a 300 MW coal plant, which has
come under fierce opposition from locals (already the project has been
forced to move locations twice). The newest proposal will build the coal
plant, as photos below reveal, on an undeveloped beach overlooking the
Coral Triangle, one of the world's most biodiverse marine environments,
with transmission lines likely running through nearby pristine rainforest
that are home to several endangered species, including orangutans and
Analysis shows Borneo can say 'no' to coal power
(03/17/2010) Plans for a coal power plant in the Malaysian state of Sabah
in northern Borneo have run into stiff opposition. Environmentalists say
the coal plant could damage extensive coral reef systems, pollute water
supplies, open rainforests to mining, and contribute to global climate
change, undercutting Sabah's image as a 'green' destination. The federal
government contends that the coal plant is necessary to fix Sabah's energy
problems. However, a recent energy audit by the Renewable and Appropriate
Energy Laboratory (RAEL) at the University of California Berkeley shows
that pollution-intensive coal doesn't have to be in Sabah's future.
Malaysia and China agree to $11 billion deal to build mines, dams in
(01/13/2010) Malaysia and China today agreed to am $11 billion deal
that will turn a vast area of Sarawak, a Malaysian state in northern
Borneo, into an industrial corridor for mining and energy development,
reports The Financial Times.
Coal plant could damage rainforest reserves, coral reefs, palm oil
plantations in Malaysian Borneo
(12/20/2009) A proposed coal-fired power plant in Malaysian Borneo could
damage the region's world-renowned coral reefs, pollute air and water
supplies, open Sabah's biodiverse rainforests to mining, and undermine the
state's effort to promote itself as a destination for "green" investment
and ecotourism, warn environmentalists leading an effort to block the
project. The scheme, which is backed by the federal Tenaga Nasional Berhad
and state energy company, Sabah Electricity Sdn. Bhd, has faced strong
opposition and already been forced to re-locate twice since it was
conceived more than two years ago. The 300-MW plant is now planned for a
coastal area that is situated in the middle of the Coral Triangle/Sulu
Sulawesi Marine Ecoregion, an area renowned for astounding levels of
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