Tenaga Nasional, Malaysia's biggest energy producer, has scrapped a bid for a unit of Bord Gais, narrowing the field to two suitors.

Bord Gais's retail and power generation division "might not be the one to fit us as we have other priorities", Fazlur Rahman Zainuddin, chief financial officer with state-owned Tenaga, said in an interview in Kuala Lumpur yesterday.

The remaining bids are from a group led by Viridian Group, backed by Macquarie Group, and from Centrica Plc, the UK's largest power company, according to people with knowledge of the matter.

The Viridian-led offer is above a €1 billion reserve set by Bord Gais, while Centrica’s is below, said three people who asked not to be identified as the process is private.

The Government, which agreed to sell the asset under the conditions of the EU-IMF bailout in 2010, said last month the business will be sold before the end of the year.

The Bord Gais unit, which owns 15 per cent of installed wind farms around the country, had been expected to fetch as much as €1.4 billion.

Officials from Bord Gais, Centrica, Viridian, Northern Ireland’s largest energy supplier, and Macquarie declined to comment on the process.

"I can't see the government giving the business away for a bargain basement price, even if a sale is part of the bailout programme," said Alan McQuaid, an economist with Merrion Capital in Dublin.

Tenaga submitted a non-binding offer seeking to expand earnings and cut its reliance on regulated business in Malaysia, Mr Fazlur said, adding that buying the company now appears "a little advanced".

“Given the focus on new power plants and the experience we have in the regulated business here, we feel the focus should be in Malaysia,” he said.

Bloomberg