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.