(AFP) The government has shelved three major power projects for up to two years amid slowing demand for electricity, reports said today.

The Energy, Communications and Multimedia ministry has endorsed a revised program by state-owned Tenaga Nasional to keep the electricity reserve margin at between 32 and 36 percent, the Business Times said.

Last year, margins stood at 29 percent and Malaysia's installed capacity totalled 13,135 megawatts, of which 66 percent belonged to Tenaga, the newspaper said.

In line with the revision, Tenaga has cut its forecast for electricity demand growth this year from 9.4 percent to five percent due to a sharper-than-expected economic slowdown.

Projects affected under the new programme are Tenaga's redevelopment of a 1,500 megawatt plant, a 2,100 megawatt plant of SKS Ventures and a 1,400 megawatt plant by Jimah Power Holdings, a unit of YTL Power International.

The three projects are now scheduled to start operations between 2005 and 2008, the utility giant said.

"The reserve margin at 32-36 percent is only a short term phenomenon ... if there is sign of an upturn in the economy, Tenaga has the ability to accelerate the commissioning of new power plants," its chief executive Pian Sukro was quoted as saying.

Major blow

Tenaga has also cut its capital expenditure budget by 26 percent to RM5.7 billion for the year ending August 2002, compared with RM7.7 billion in 2001.

Of the total, 48 percent was for power generation, 22 percent for transmission, 18 percent for distribution and 12 percent for other expenditures.

Analysts said the move dealt a major blow to YTL Power and SKS Ventures, both of which had hoped to start their projects earlier rather than later.

Both companies would be developing coal-fired plants that were originally slated to commence operations in 2006.