Asian Development Bank to review Sarawak Energy loan

Asian Development Bank to review Sarawak Energy loan

Malaysian NGOs score victory in visit to ADB headquarters in Manila - Proposed loan to power supplier Sarawak Energy delayed in order to undergo enhanced due diligence

(MANILA / PHILIPPINES) The Asian Development Bank (ADB) will review a proposed US$ 45 million loan to Sarawak Energy Berhad (SEB) for a power transmission line over allegations of corruption and failure to duly consult and compensate affected indigenous communities. This was announced by ADB officials last week to a Malaysian NGO delegation at the bank’s headquarters in Manila.

The loan is being sought by state-owned SEB to build a high voltage transmission line from Mambong (Sarawak) to West Kalimantan (Indonesia) as part of the Trans-Borneo Power Grid. As of February 2015, SEB reported the completion of 90% of the transmission towers and 65% of the transmission line.

Indigenous representatives from Sarawak highlighted their concerns about the loan in meetings with ADB's Office of Anti-Corruption and Integrity and senior bank staff. In particular, they presented the results of a fact-finding mission to the communities affected by the power line.

Caroline Nyurang from Sarawak’s anti-dam network SAVE Rivers said: “ADB is taking our concerns very seriously and has initiated an in-depth due diligence process for the proposed loan to SEB.” ADB officials reportedly said they were particularly aware of SEB’s close ties to the family of Sarawak Governor Abdul Taib Mahmud.

As a result of the NGO complaint, the proposed SEB loan is currently undergoing intense scrutiny which includes a review of SEB’s corporate structure, track record and procurement practices. Bank officials said that ADB was committed to upholding its safeguard standards, including meaningful consultation and functioning grievance mechanisms.

Thomas Jalong, president of Malaysian indigenous peoples’ network, JOAS, said: “We are confident that ADB’s due diligence process will reveal safeguard violations by SEB with their transmission lines as well as with other energy projects.”

In a first reaction, Sarawak Energy denied any wrongdoing and said it was “disappointed to note the latest chapter of the long running smear campaign waged against the company and the State Government” by groups with “irrelevant agendas”.

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