KL energy giant favors purchase of RI coal mine

KL energy giant favors purchase of RI coal mine

KUALA LUMPUR (AFP): Malaysia utilities giant Tenaga Nasional
Bhd has said its plan to acquire a coal mine in Indonesia's
Kalimantan on Borneo island is to protect against a sudden rise
in coal prices.

Tenaga Chairman Jamaludin Jarjis, quoted by Bernama news
agency Sunday, said that under the firm's new policy of
diversifying into coal, it would be irresponsible not to ensure a
steady supply of the fuel.

Tenaga has proposed to buy the Indonesian coal mine, owned by
Dynamic Acres Sdn Bhd, for 226.1 million ringgit (US$59.5
million).

Tenaga currently depends on gas for its power generation.
However, it faces higher gas costs as Malaysian national oil
company Petroliam Nasional Bhd (Petronas) has requested a price
increase.

Petronas has submitted a proposed new rate for its liquefied
natural gas, with the government expected to announce a decision
at the end of the year.

At present about 80 percent of Tenaga's generation capacity
comes from natural gas.

Jamaludin had said could not object to Petronas's price hike
as it had been supplying gas at half the price fetched in the
world market.

With the proposed purchase of the coal mine, Jamaludin said
Tenaga hoped to source around 30-50 percent of its coal
+requirement internally.

Over the next 10 years, three major coal-fired power plants
are expected to go into operation, namely Janamanjung in Perak,
Jimah in Negeri Sembilan and Pulau Bunting in Kedah.

Tenaga, Malaysia's largest listed company, also said it may
issue asset backed securities and convertible bonds to repay some
of its foreign debt.

As of May 31, 2001, its debts stood at 28.3 billion ringgit,
of which 15.4 billion ringgit was in foreign currencies.

"With Malaysia now back on the radar screen of foreign
investors... I think it is a good time to start looking at
securitizing some assets offshore," Jamaludin said.

Jamaludin said Tenaga could list the securitized assets in New
York and London, adding that it could be one way to pay foreign
debt rather than using its ringgit earnings.

Tenaga would also lower the electricity reserve margin that it
has to bear to around 10-15 percent in the medium term from the
current 30 percent, he announced.

Jamaludin said compared with no more than five percent reserve
margin in the U.S. and 2.5 percent in Japan, the 30 percent level
in Malaysia was too high a figure.