SESB appreciate the effort taken by YB. Dr. Hiew, MP for Kota Kinabalu to conduct his fact finding visit to SESB’s power stations in Sandakan as reported recently.

His reports to the media on the conditions of our power plants had confirmed the information SESB had disseminated to the public all these while, hence our proposal to solve the problem through the installation of a new power plant in the East Coast, as an enabler towards long term resolution.

As mentioned most of our plants are not operating at full capacity due to age factor and capacity over-stretched all these years. One of the power plant at Batu Sapi had stopped operation since 2008 as its efficiency had dropped below 50% and the extent of damage did not render it worthy of any repair effort.

2. Capacity upgrading and maintenance projects

It has been SESB’s plan to stop the operation of all diesel fuelled power plants in the East Coast as most have reached maximum life span and SESB’s has to bear a very high maintenance costs. But the plants can only cease to operate once the proposed coal plants (expected to produce 300MW) is completed in year 2010-2011.

However due to the delay in the implementation of the coal-plants projects, SESB has to spend almost RM60 million on repair and upgrading projects to all the aging existing plants, as stop gaps measures to meet the ever increasing demand of our customers.

3. Interim Actions Undertaken by SESB: On top of the RM60 million spent to meet the exigencies of electricity demands, SESB had also undertaken the following actions: i) Purchased of 20 units of 1MW ( 1MWx20 =20MW) gen set distributed to critical areas at the West Coast and another 20 units of 1MW ( 1MWx20 =20MW) to be purchased soon to be distributed to the East Coast. Total costs for 40 gen-sets is RM 48million.

ii) Rehabilitation of one diesel power plant in Sandakan (20MW) costing us RM 25 million

iii) Installation of 2x1MW mobile gen-set in Beluran dan 1 x 1MW in Kota Kinabatangan with the total cost of RM3million

iv) By January 2010 the completion of first unit of IPP Powertron II (65MW).

The implementation of projects as stated above is expected to ease the demand-supply imbalances, however, SESB would like to stress here, these projects are emplaced to upgrade capacity but does not guarantee 100% supply reliability. Reliability is dependent not merely on conditions of the machines but transmission efficiency, the longer the distance the higher the probability of transmission lines being exposed to disturbances along the way. But if there is a major power plants located at the East Coast definitely it will reduced probability of such occurrences.

4. Long Term Action Plan

SESB’s envisage in the long term, the problems on insufficient power supply can be corrected when ALL of the following projects are completed:

i) The full completion of IPP Powertron second and final phase ( 125MW ), total capacity 190 MW (65+125=190MW);

ii) Completion of SPR Energy plant which carries another significant capacity i.e (100MW) in 2012-2013;

iii) Completion of Kimanis Power ( 300MW ) -2013

iv) Installation of Coal Plant (300MW) year 2014-2015.

5. Conclusion

The total cost for all of the above stated projects is expected to be around RM7.5 billion and for the FY2007-2009, SESB had spent almost RM 60 million (59, 860,083.69) to repair and upgrade capacity of our power plants in Sandakan and Tawau. SESB‘s inability to proceed with major project in the East Coast has caused millions to be spent on rehabilitation of old plants. Most of these plants requires replacement of parts and repair task requires expert intervention which are not easily available in Malaysia or outside. And the rehabilitation process takes months or years to complete. Therefore it is much more practical, and cost effective to set up new plants in the East Coast which will not only operate with much higher capacity but ascertain high degree of transmission reliability.

SESB appreciate the support and political will of both State and Federal Government and all parties concerns towards assisting SESB to resolve our problems in the most economical and sustainable manner. SESB fully respect the concerns towards environmental preservation, conservation and protection, the future generations include your children and ours too, however in dealing with these issues it is our hope that both concerns, environmental and adequate power supply will be seen as complementing interests not conflicting interests. Power supply as basic utility is needed as critical infra towards the realization of our ideals and aspirations, community progress, quality of life and business sustainability.