Sime Darby pulls out of undersea cable project

Sime Darby pulls out of undersea cable project
Business Times
2008-June-26

SIME Darby Bhd has pulled out of the planned RM6 billion submarine cable project across the South China Sea, saying that it does not fit in with its business strategy.The cable was to carry power between Sarawak and Peninsular Malaysia.In a statement issued in Kuala Lumpur yesterday, Sime Darby said it would not buy equity stakes in Sarawak Hidro Sdn Bhd, developer of the cable project and owner of the Bakun Dam in Sarawak.Sime Darby president and group chief executive officer Datuk Seri Ahmad Zubir Murshid said the decision was made after a thorough review of the project."Our board is of the view that the project economics do not fit in with our business strategy. We are withdrawing our proposal to take up an equity interest in the project, but will continue in our role as a contractor to complete the construction of the dam," he said.The company's decision to pull out may surprise the market.In November last year, Sime Darby, via letters of intent, had received the green light to own 60 per cent of Sarawak Hidro, with the remaining stake to be equally shared between the Ministry of Finance and the state government.The letters of intent allowed Sime Darby to begin detailed discussions on the cost of the undersea cable project as well as outline tariff proposals for Tenaga Nasional Bhd."This is definitely a bankable project. Our intention is to bring back power to Peninsular Malaysia," Ahmad Zubir told the media then.The project, dubbed the High Voltage Direct Current transmission link, involves laying two 700km submarine cables from Sarawak to Johor. The first cable was expected to have been ready for transmission by 2013 and the second, by 2015.