SYDNEY, May 19 (Reuters) - The Australian government will spend...

SYDNEY, May 19 (Reuters) - The Australian government will spend up to A$600 million ($468 million) to build a new gas-fired power plant in the country's New South Wales (NSW) state to boost gas supplies and drive down energy prices, Energy Minister Angus Taylor said on Wednesday.

The state-funded, 660-megawatt (MW) plant in NSW's Hunter Valley region is expected to offset a looming power shortfall in the country's southern states after AGL Energy's (AGL) aging coal-fired Liddell power station shuts down in 2023.

"Securing reliable, affordable energy is critical to our plan to secure Australia's recovery from the COVID-19 pandemic," Taylor said in a statement.

The government last September had asked the power industry to make investment decisions by the end of April to build 1,000 MW of flexible power capacity to replace the Liddell plant, or else it would build a gas-fired plant to prevent blackouts.

The industry had criticised the plan, saying it would deter private investment in both renewable and flexible power if the government becomes a competitor in the market.

Taylor said the federal government had given the private sector every opportunity and was fulfilling its promise to deliver cheap and reliable power for businesses and households.

"We were very clear from the start - we will not stand by and watch prices go up and the lights go off," Taylor said. ($1 = 1.2832 Australian dollars)