Malaysia needs to revive Sarawak hydropower plans – Tenaga Chairman

Posted on April 29, 2011. Filed under: Energy |

-Reuters-

* Malaysia faces rising coal prices and depleting gas reserves

* Hydropower plants in Sarawak could yield up to 28,000 MW

* Nuclear power cannot be ruled out, but plans likely to be delayed

By Francis Kan

SINGAPORE, April 29 (Reuters) – Malaysia needs to revive plans to transmit hydro-generated electricity from the resource-rich state of Sarawak to the rest of the country to diversify its energy mix, said the chairman of state utility Tenaga Nasional Berhad on Friday.

The Southeast Asian country faces the twin challenges of rising coal prices and fast-depleting gas reserves. The two fossil fuels make up almost 95 percent of the Malaysian peninsula’s generation mix, with hydropower accounting for another 5 percent.

“The prospect of transferring future hydro-electricity to the peninsula has to be revived, especially with concerns over nuclear power” said Tenaga Chairman Leo Moggie at an industry event in Singapore.

An earlier plan to build a 2,400 MW hydro-electric dam at Bakun in Sarawak to transmit power to the Malaysian peninsula, will now be used solely for Sarawak’s power needs. [ID:nL3E7ES0B8]

However, other hydropower projects with a potential of up to 28,000 MW could be developed in Sarwak to feed the peninsula, said Moggie.

“In terms of practical development it may be less than 28,000 MW, but it is still very substantial,” he said.

Tenaga announced in 2009 that it will be part of a consortium to build a $2 billion submarine cable carrying electricity from Sarawak on Borneo to the Malaysian peninsula.

The company, which owns more than half of the total generation capacity installed on the Malaysian peninsula, reported a 37 drop in its second-quarter net profit last week and warned of a difficult year on soaring coal prices and insufficient gas supply. [ID:nL3E7FL0CP]

Coal prices have risen more than 20 percent to an average of $103.8 per tonne in the second quarter from the first quarter.

Moggie also said that Malaysia needed to invest in liquefied natural gas (LNG) import facilities to help reduce dependence on coal. The country’s first LNG import terminal is set to start operations in August next year.

Nuclear power is also an option, though public opinion following the disaster at the Fukushima plant in Japan means Malaysia’s aim of having its first nuclear plant operating by 2021 faces hurdles, Moggie said.

“The nuclear option cannot be totally ignored. It is not a question of technical issues but public perception,” he said.

(Reporting by Francis Kan)

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