TNB supportive of govt’s targeted subsidy

KUALA LUMPUR (May 18): Tenaga Nasional Bhd supports the government’s provision of targeted electricity subsidies, which will help to maintain the country’s economic growth and reduce cost pressures on low-income groups, said TNB chairman Datuk Abdul Razak Abdul Majid.

“We will continue to support the government's continuous effort to manage the tariff within the framework of the Imbalance Cost Pass Through (ICPT) mechanism, while balancing the need for affordable tariffs for the rakyat and economic growth.

“At the same time, we continue the efforts to give back to the communities through impactful educational and socio-economic initiatives,” Abdul Razak said in a statement in conjunction with TNB’s 33rd annual general meeting (AGM) on Thursday (May 18).

In December last year, Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad announced that the government would continue to bear RM10.76 billion in subsidy to maintain electricity tariff at the current rates for the domestic, lower voltage (LV) and specific agricultural users.

However, medium voltage (MV) and high voltage (HV) users will be charged a surcharge of 20 sen per kilowatt-hour (kWh) from Jan 1 this year, due to the sharp rise in fuel costs.

Amidst the high fuel prices seen from 2022 and Malaysia’s buoyant economic recovery, he said that TNB has committed to meet the energy needs of industrial, commercial and residential customers, while helping to steer Malaysia’s journey toward a responsible energy transition.

“The significant investments we made over the years to diversify energy sources as well as grow our renewable energy portfolio enabled us to continue providing sustainable and reliable energy.

“Our efforts were recognised by our customers as shown by consistent performance for two consecutive years in our customer satisfaction index scores of 87% in 2022,” he said.

Meanwhile, TNB president and chief executive officer Datuk Indera Baharin Din noted that the coal and gas prices reached multi-year highs following the global energy crisis last year, increasing by 83% and 11% year-on-year, respectively.

“Domestically, Malaysia was not spared from the higher prices of fuel, which had a significant impact on the cost of generating electricity.

"While the energy crisis had impacted the nation’s system energy costs over the past two years, it had strengthened TNB’s resolve to accelerate and implement a pathway to a cleaner generation mix by 2050," said Baharin.

This means shifting away from the high dependence of electricity generation in Peninsular Malaysia from fossil fuel sources. Fuels account for more than 70% of the generation costs.

“Despite this, we continued to fulfil our obligations by providing a reliable, secure and affordable supply of power to the nation,” he said.

In managing the higher fuel costs, he said that TNB has continued to work with the government in the implementation of the ICPT mechanism.

“Under this mechanism, the government has provided subsidies for the rakyat to offset the higher fuel costs for generating electricity. This, in addition to the prudent management of our working capital, has helped TNB to alleviate the pressure from high fuel prices," he noted.

Operational-wise, the utility giant has successfully maintained world-class standards, with its power plants recording an availability factor of 83.2%, while transmission system minutes — a benchmark for the minutes of interruption caused by transmission — was 0.2 minutes in 2022. Its system average interruption duration index (SAIDI) was 45.1 minutes.

Moving forward, he said that TNB will set aside significant capital expenditure (capex) for initiatives to fast-track TNB's transition to net zero emissions by 2050

"Ultimately, we have an eye on the longer-term future of TNB, and these investments will gradually shift our existing portfolios to greener ones, for more sustainable business growth of TNB while creating long-term value for shareholders," he added.

TNB shares rose four sen or 0.41% to settle at RM9.79 on Thursday, giving it a market capitalisation of RM56.32 billion.