UPDATE 1-Huaneng denies report on Australia power interest

(Recasts with response from Huaneng)

PERTH, May 9 (Reuters) - Huaneng Power (0902.HK: Quote, Profile, Research, Stock Buzz), China's largest independent power company, on Friday denied a media report it may join the bidding for power assets slated for sale by Australia's New South Wales state.

The Sydney Morning Herald reported that Huaneng has asked its Australian team to follow the New South Wales state privatisation process and send suggestions back to senior management, citing an unidentified source with knowledge of Huaneng's foreign investment plans.

"We are unaware of this news. We've never heard of anything related to the Australia assets. Our company has never said we are interested in assets in Australia," said an official at Huaneng Power.

Officials at parent Huaneng Group were not immediately available for comment.

Rating agency Fitch Ratings said Chinese interest would increase competitive tension in the market and boost the New South Wales power sell off.

New South Wales state premier, Morris Iemma, said on Sunday he would push ahead with plans to privatise the state's power assets even though his own ruling party had voted against the proposal.

The state government hopes to raise about A$15 billion ($14.2 billion) to fund infrastructure projects. It has yet decide on the form a privatisation might take, with options believed to include trade sales or the listing of a new entity on the Australian stock exchange.

Origin Energy (ORG.AX: Quote, Profile, Research, Stock Buzz), AGL Energy (AGK.AX: Quote, Profile, Research, Stock Buzz) and Hong Kong utility CLP Holdings' (0002.HK: Quote, Profile, Research, Stock Buzz) TRUenergy unit are seen as potential trade bidders for the retail arms of the New South Wales power assets, while UK's International Power Plc IP.L has also expressed interest in the power assets. Huaneng, which paid $3 billion to buy a Singapore power plant last month, has stakes in two power plants in Australia's Queensland state. ($1=A$1.06) (Additional reporting by Judy Hua in Hong Kong) (Reporting by Fayen Wong)