Tenaga to go ahead with S. Kalimantan coal mine investment

Malaysia's state-owned power utility giant Tenaga Nasional Bhd on Monday defended its controversial 85 million dollars investment in a coal mine in Kalimantan, AFP reported.

Tenaga chairman Awang Adek Hussin said the investment was viable and it was in line with the company's plan to reduce its dependency on gas for power supply.

Tenaga plans to acquire a 70 percent stake in Dynamic Acres Sdn Bhd, which owns the coal mine in South Kalimantan, Awang Adek said.

Awang Adek said 20 percent of the investment would be financed by Tenaga while the remaining 80 percent would be financed by an international bank.

Critics have said that it would make more sense for Tenaga to invest in an oil field and refinery.

Awang Adek said Tenaga found that coal was the best alternative to produce power because it was comparatively cheaper than gas.

Tenaga used about 60 percent of gas as its fuel, he said.

"We are too dependent on gas as fuel, we have to diversify and coal is most economic way because it is cheap and at the same time the present gas supply isnot enough," he said.

Awang Adek said with the investment in Kalimantan, Tenaga would be able to lock in a stable supply of coal because Dynamic Acres's reserves exceededTenaga's requirement of 27 million metric tonnes for a 15-20 year period.(*)