Even though the price of crude oil has doubled from US$70 per barrel in 2006 to US$130 per barrel now, fuel costs cannot be more than 30 per cent of TNB’s total cost. The power purchase from the IPPs is the real problem that punches a hole in its earnings, says Ong Eu Soon.
Since the last tariff increase in 2006, TNB’s profit for the financial year 2007 hit a record high, soaring 73 per cent to RM4.8 billion. Yet we were told then, TNB would go bankrupt if there is no tariff hike.
It is unfair for the people to be absorbing the costs of fuel price hike while TNB is still making indecently huge profits.
On 4 June 2008, the government did it again by allowing TNB to raise power tariffs by up to 11 per cent for households and 26 per cent for commercial and industrial users. As in 2006, immediately after the news was announced, the share market responded with a ‘buy’ call.
According to Reuters (25 September 2007 ), power purchases from the IPPs make up 45 per cent of Tenaga’s total costs and fuel, 15 per cent.
Tenaga buys subsidised gas from national oil firm Petronas, but the gas price will be raised 123 per cent under the new price structure, part of a revamp of the government’s subsidy scheme.
Coal price has also gone up by more than 170 per cent since 2006, President and Chief Executive Che Khalib Mohamad Noh said. (The Associated Press, 5 June 2008)
Even though the price of crude oil has doubled from US$70 per barrel in 2006 to US$130 per barrel now, fuel costs cannot be more than 30 per cent of TNB’s total cost. The power purchase from the IPPs is the real problem that punches a hole in its earnings, not the fuel costs.
About 40 per cent of Malaysia’s total generation capacity of 19,000 megawatts is not used. TNB and the government should try to attract investors to Malaysia, as we have plenty of electricity, while China is facing a huge problem after the Wenchuan earthquake.
The government again chose the easy way out by passing the cost and the problem to the people, totally ignoring its responsibility towards the people.
See also: Electricity tariff hike sparks concern