KUALA LUMPUR: Tenaga Nasional Bhd (TNB) expects its gas shortage woes to end in September, once Petroliam Nasional Bhd’s (Petronas) liquefied natural gas (LNG) regasification terminal in Malacca starts operations.
Datuk Seri Che Khalib Mohamad Noh, TNB president and CEO, said the national electricity provider is still in the early stages of negotiations with oil majors on importing gas at international market prices. He said TNB could not firm up negotiations as the government had yet to finalise the guidelines, rules and policy for gas importation.
“Once we have all the rules cleared, we can firm up with all the parties,” he told a media briefing yesterday.
He added that a task force, which consists of TNB, Petronas and the government, is looking at addressing the gas supply shortage first due to its importance.
“Once the LNG terminal is ready, we can resolve the gas supply shortage issue. The financial part [the pricing of the gas from the new plant] can be resolved between us and the government,” he said. When asked if the import of gas at market prices would affect electricity tariffs, Che Khalib said the task force will look into it.
“The government knows what is best for the country,” he said. Petronas currently supplies around 1,100 million standard cu ft per day (mmscfd) of gas to TNB, which is 8.8% short of its 1,250 mmscfd requirements.
TNB has posted losses for five consecutive quarters as it has to source alternative fuels such as oil and distillates to generate electricity.
Che Khalib said TNB is expected to return to the black for 2QFY12 ending Feb 29 after receiving RM2 billion in payments from Petronas and the government as part of a fuel cost-sharing mechanism.
“We received the first payment of RM1 billion from Petronas on Dec 30. We expect the remaining payment in February,” he said.
Last December, TNB announced that the company would equally share with Petronas and the government the differential cost of RM3.07 billion it had incurred due to a gas shortage from Jan 1, 2010 until Oct 31, 2011. This will allow the utility company to recoup some RM2 billion in costs.
However, the profit may only last for one quarter as rising fuel costs coupled with unchanged electricity tariffs will continue to erode TNB’s earnings.
For 1QFY12 ended Nov 30, it posted a net loss of RM224.7 million compared with a net profit of RM716.5 million a year earlier, due to higher operating expenses from using oil and distillate to generate electricity.
TNB said its oil consumption had increased by 26 times to 271,949 tonnes from 10,554 tonnes a year earlier, while the total amount incurred rose to RM593.3 million from RM16.4 million. It also noted that distillate consumption had increased by 28 times to 168.9 million litres from six million litres a year earlier. The cost for distillate consumption rose to RM413.8 million from RM17.6 million.
TNB’s revenue rose 12.4% to RM8.69 billion from RM7.73 billion a year earlier, while unit electricity demand grew 3.9%.
On a quarterly basis, TNB’s net loss narrowed by 50.5% from RM453.9 million three months earlier. This was attributed to lower operating costs due to reduced usage of distillate and lower costs of repair and maintenance.
TNB fell 5.78% from a six-month high of RM6.59 on July 20, 2011 to close at RM6.23 yesterday.
This article appeared in The Edge Financial Daily, January 18, 2012.
Datuk Seri Che Khalib Mohamad Noh, TNB president and CEO, said the national electricity provider is still in the early stages of negotiations with oil majors on importing gas at international market prices. He said TNB could not firm up negotiations as the government had yet to finalise the guidelines, rules and policy for gas importation.
“Once we have all the rules cleared, we can firm up with all the parties,” he told a media briefing yesterday.
He added that a task force, which consists of TNB, Petronas and the government, is looking at addressing the gas supply shortage first due to its importance.
“Once the LNG terminal is ready, we can resolve the gas supply shortage issue. The financial part [the pricing of the gas from the new plant] can be resolved between us and the government,” he said. When asked if the import of gas at market prices would affect electricity tariffs, Che Khalib said the task force will look into it.
“The government knows what is best for the country,” he said. Petronas currently supplies around 1,100 million standard cu ft per day (mmscfd) of gas to TNB, which is 8.8% short of its 1,250 mmscfd requirements.
TNB has posted losses for five consecutive quarters as it has to source alternative fuels such as oil and distillates to generate electricity.
Che Khalib said TNB is expected to return to the black for 2QFY12 ending Feb 29 after receiving RM2 billion in payments from Petronas and the government as part of a fuel cost-sharing mechanism.
“We received the first payment of RM1 billion from Petronas on Dec 30. We expect the remaining payment in February,” he said.
Last December, TNB announced that the company would equally share with Petronas and the government the differential cost of RM3.07 billion it had incurred due to a gas shortage from Jan 1, 2010 until Oct 31, 2011. This will allow the utility company to recoup some RM2 billion in costs.
However, the profit may only last for one quarter as rising fuel costs coupled with unchanged electricity tariffs will continue to erode TNB’s earnings.
For 1QFY12 ended Nov 30, it posted a net loss of RM224.7 million compared with a net profit of RM716.5 million a year earlier, due to higher operating expenses from using oil and distillate to generate electricity.
TNB said its oil consumption had increased by 26 times to 271,949 tonnes from 10,554 tonnes a year earlier, while the total amount incurred rose to RM593.3 million from RM16.4 million. It also noted that distillate consumption had increased by 28 times to 168.9 million litres from six million litres a year earlier. The cost for distillate consumption rose to RM413.8 million from RM17.6 million.
TNB’s revenue rose 12.4% to RM8.69 billion from RM7.73 billion a year earlier, while unit electricity demand grew 3.9%.
On a quarterly basis, TNB’s net loss narrowed by 50.5% from RM453.9 million three months earlier. This was attributed to lower operating costs due to reduced usage of distillate and lower costs of repair and maintenance.
TNB fell 5.78% from a six-month high of RM6.59 on July 20, 2011 to close at RM6.23 yesterday.
This article appeared in The Edge Financial Daily, January 18, 2012.
