Energy giant Tenaga Nasional said it will proceed with a coal power plant in an environmentally sensitive area despite opposition from residents who vowed to step up protests.

Tenaga Nasional chairman Leo Moggie insisted that the RM1.3 billion 300MW plant in Sabah would have minimal impact on the environment.

Local environmentalists fear the coal plant will damage the environment, including the pristine Danum Valley forest.

But Moggie argued that the site "we found is the most logical choice. The nearby bay has water depth that is suitable (for transporting coal on barges)."

"The technology has also been well developed world-wide and the impact on the environment is marginal," he was quoted as saying by the New Straits Times newspaper.

Moggie is also chairman of Sabah Electricity, which is awarding the contract for the power plant. Tenaga Nasional has a 80 percent stake in Sabah Electric while the balance is owned by Sabah state.

Not convinced

Moggie said the successful bidder would have to comply with environmental impact and control measures when operating the plant, which will be powered by coal imported from Indonesia's neighbouring Kalimantan province.

Sabah Environment Action Committee chairman Wong Tack rejected Moggie's assurances and promised to step up opposition against the project.

"I am not convinced by his statement. I have not seen any environment reports supporting the power plant," he told AFP .

Wong said a seminar would be held to create public awareness of the dangers of the coal plant, and a petition would be raised among the tens of thousands of residents.