§ Mr. Tom ClarkeTo ask the Secretary of State for Foreign and Commonwealth Affairs what economic rate of return was projected by the Overseas Development Administration for the Pergau dam project in Malaysia(a) at the time of the contract proposal in January 1989 when the price was £316 million, (b) at the time of the revised contract proposal in April 1989 when the price was £397 million and (c) at the time approval was given in 1991 when the price was £417 million.
§ Mr. Lennox-BoydThe appropriate method of economic appraisal for projects like Pergau which are part of a financially viable interconnected grid system involves calculation of the least cost expansion path. This method utilises a computer model to analyse and minimise total systems costs as new generating units are added to meet the forecast levels of demand.
In January 1989 ODA did not have sufficient information to judge whether Pergau appeared on the least cost path although this seemed likely at the then price of £316 million; at subsequent higher cost estimates the project was judged to be outside the least cost expansion path.