State utility firm Taiwan Power Co said yesterday it will hold a public tender to select a supplier for liquefied natural gas in a 25-year deal worth T$400 billion (US$11.8 billion) and it had no preference for any specific bidder.

Taipower made the remarks after local newspapers said Vice-President Annette Lu discussed a supply contract with Indonesian officials during a controversial visit last week which ruffled China's feathers.

The comments also come hard on the heels of a decision by Taiwan's arch rival, China, to award a multi-billion dollar liquefied natural gas (LNG) supply contract to Australia, bypassing a bid by BP in Indonesia.

"We will hold the tender in accordance with the government's procurement procedures. It will be a public tender with no preference for any bidder," said a Taipower executive. He did 'NOT' set a timetable for the tender.

Taiwan held two bidding rounds last year for 1.7 million tonnes a year of natural gas, but both failed because of a small number of bids.

Taipower plans to reopen the tender after the cabinet approves a new schedule for the Tatan power plant to start commercial operations.

Tatan, in Taiwan's northern county of Taoyuan, will have eight power generating units and a designed capacity of 4,000 megawatts. Taipower plans to bring its first unit onstream by 2005, delayed from an original schedule of 2004.

"We evaluate Taiwan's power demand on a regular basis. We decided to delay the operation schedule for the Tatan plant as there can be an electricity glut if we stick to the original timetable," said another Taipower official.

The LNG tender has drawn wide attention not only because of the size of the contract, but also because the winner of the deal will end a monopoly by state-owned Chinese Petroleum Corp, which owns Taiwan's sole LNG receiving terminal.

Taiwan is heavily dependent on imported natural gas, taking more than 95 per cent of its requirements from overseas. And demand is growing as more gas-fired power plants begin operation.

Indonesia, the world's biggest LNG exporter, said yesterday it had not discussed any LNG supply deal during Lu's visit last week, which she described as a diplomatic victory for Taipei but a setback for arch-rival Beijing.

Beijing insists Taiwan is a rebel province not entitled to diplomatic recognition by any country and complains bitterly over trips by Taiwan officials to countries with which it has ties. China has mocked Lu's trip as a farce.

Jakarta, which has no diplomatic ties with Taipei, tried its best to distance itself from Lu's trip after China raised the matter. Indonesian sources said she had met the labour and environment ministers during her four-day stay.