Kuala Lumpur, Nov 27: Four Malaysian banks on Thursday agreed to provide $401 million to finance the first independent power utility in the country dedicated to servicing a hi-tech park.

Malayan Banking Bhd (Maybank), Bank Bumiputra Malaysia Bhd, Sime Bank Bhd and Arab-Malaysian Bank Bhd have fully underwritten the 1.405 billion ringgit facility, part of which will later be sold down to financial institutions in Malaysia.

Acknowledging the funds were being provided at a difficult time in Malaysian markets, the bankers said they were convinced of the project's viability and returns.

Consultants hired to assess the project ``proved that the IPU (Independent Power Utility) is indeed viable and demonstrates robust financials on the back of a very sound technical, legal and insurance coverage qualities'', chief executive officer of Sime Bank Ismail Zakaria said at the signing ceremony.

Ismail also said the banking consortium believed that such infrastructure projects had to continue as they were critical to support Malaysia's economic activity and growth.

Due to a financial crisis that has swept the region, the ringgit has been pummelled to record lows against the dollar and the country's stock market prices have been halved since the beginning of the year.

In an austerity measure, Malaysia has shelved some infrastructure projects, including the Bakun hydroelectric dam previously estimated at $5.2 billion, but has said it will press ahead with information technology investments.

The government has not yet decided if it will resume Bakun, minister for energy, telecommunications and posts Leo Moggie said on Thursday.

Malaysia already has a handful of independent power producers (IPPs), or private generators of electricity. The new utility will also distribute power to the Kulim High Tech Industrial Park in northern Kedah state.

The utility, named Northern Utility Resources (NUR) Sdn Bhd, will operate through affiliate companies NUR generation Sdn Bhd and NUR distribution Sdn Bhd.

The power station has a generating capacity of 450 megawatts and standby power of 240 megawatts from Malaysia's national grid, if required. Electronics and electrical products are a key export earner for Malaysia. The Kulim park is an emerging manufacturing area, following more established high-technology sites in Penang island state. Officials at the ceremony noted that the Kulim park had attracted nearly 12 billion ringgit so far in investments from global high-tech companies.

The power plant is expected to be fully commissioned by mid-2000 with construction starting in December 1997, a statement from NUR said. State power firm Tenaga National Bhd is a shareholder in NUR with a 20 per cent equity stake. Other shareholders are Manfield Development Sdn Bhd (40 per cent), Jalinan Muhibbah Sdn Bhd (20 per cent) and the Malaysian government's investment arm Khazanah Nasional Bhd (20 per cent). Banks in Malaysia had been directed to be more prudent in their lending, with central Bank Negara Malaysia seeking to stave off any potential weaknesses in the system following problems in neighbouring countries including Thailand and Indonesia. But the bankers for the utility financing said at a news conference they were convinced of the strength of the project. ``We are very confident," Ismail said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.