Tenaga Nasional, Malaysia’s biggest company by market value, is lobbying the government to allow international investors to own as much as 30 percent of the national utility, its chief executive said Tuesday.

Tenaga is also considering taking up a 20 percent stake in a proposed project to lay undersea power cables from Borneo island to the mainland, Che Khalib Mohamad Noh told Dow Jones Newswires in an interview.

Che Khalib said the current 25 percent cap on foreign shareholding “may not be in line” with the government’s aim to transform state-owned companies into regional players.

“We are looking at (raising the foreign shareholding cap) now,” he said.

Some 23 percent of Tenaga’s shares are currently owned by international investors.

Strong overseas interest has lifted Tenaga’s share price by 50 percent over the past 12 months to 12.10 ringgit (US$3.5,euro2.9) while its market capitalization has risen to 51.4 billion ringgit(US$14.7 billion, euro12 billion).

To raise the cap on foreign shareholding, Tenaga needs approval of state agency, the Economic Planning Unit, as well as state investment arm Khazanah Nasional, which owns 37 percent of the country’s largest power company.

Che Khalib said he couldn’t say when the government may make a decision.

He said Tenaga, which is saddled with 29 billion ringgit (US$8.3 billion, euro6.9 billion) in debt, will seek to cut its debt-to-equity ratio before venturing overseas again.

Tenaga owns a power plant in Pakistan. It is also part of a consortium that is bidding for a 25-year concession to operate the national grid in the Philippines.

Che Khalib said the company’s 4.5 billion ringgit (US$1.3 billion, euro1.1 billion) in cash is enough to finance capital spending this year. He said Tenaga doesn’t need to raise borrowing further to fund its expansion as it could partner with Khazanah or other companies overseas.

Che Khalib said Tenaga may consider taking a 20 percent stake in an undersea power cable project to transport electricity generated from the Bakun hydroelectric dam on Sarawak state on Borneo island to mainland Malaysia.

The cable project may cost as much as 9 billion ringgit (US$2.6 billion, euro1.7 billion) and has not been approved by the government.

Che Khalib said the project is “viable” because the cost of power, after factoring in transmission cost, is comparable to that generated by a coal-fired plant in mainland Malaysia.

Tenaga, which owns nine power plants and Malaysia’s entire power distribution and transmission infrastructure, produces two-thirds of the country’s power needs.

Che Khalib said Tenaga’s results for the fiscal year ending August 31, 2007 will improve due to possible write-back in deferred taxes, cost savings, foreign exchange gains and asset disposals, and a 12 percent hike in electricity prices since June last year.

Elffie Chew is correspondent with Dow Jones Newswires.