KUALA LUMPUR (AFX-ASIA) – The government plans to reduce the electricity generation sector’s reliance on gas as generation fuel by as much as 20% by 2006, with a coal-gas usage ratio of 30 to 61%, Energy, Communications and Multimedia Minister Leo Moggie said.

The rest of the energy needs will be made up by hydropower and biomass.

The New Straits Times quoted Leo Moggie as saying that the government plans to build more coal-fired power plants as coal is cheap and easily available.

Currently, Malaysia has two coal-fired power plants, one each in Klang, Selangor and Janamanjung, Perak.

The Tanjung Bin power station in Johor is the third, with the first of three plants due to be operational in August 2006, followed by the second in February 2007 and another in August 2007, he said.

Mr Moggie said the construction of the fourth plant, which is located in Negeri Sembilan, is already in the pipeline and the power purchase agreement is being negotiated. It will have a capacity of 1,400 megawatts (MW).

Meanwhile, local company SKS Power Sdn Bhd has signed a bridging loan with a consortium of banks for a 200 mln rgt Islamic loan facility, which will be used for initial construction works at the Tanjung Bin power plant in Johor.

The report said the facility will be used to finance the preliminary works, including site filling and soil improvement works by dreging company IMW Dredging Sdn Bhd, which are due to finish by December 2004.

It said SKS is also expected to announce by month-end the winner of the tender to build the power plant proper as it is now evaluating submissions.

The Tanjung Bin power station comprises three plants of 700 megawatts (MW) each. The first plant is expected to be operational in August 2007.