(The Star) - Tenaga Nasional Bhd (TNB) wants “full compensation” with regards to the fuel-cost pass through mechanism that had been arranged earlier, said newly-appointed president and CEO Datuk Azman Mohd.
The national utility is still discussing these “structural issues” with the Government and hopes for a definitive resolution soon.
“We have discussed this fuel-cost pass through mechanism that we are pursuing with the Government. These are major concerns that I will still pursue in collaboration with the relevant ministries to ensure that we get full compensation, not just a third from the Government and one-third from Petroliam Nasional Bhd (Petronas) but full compensation for fuel cost pass through,” Azman told a press conference here yesterday.
TNB, Petronas and the Government agreed to equally share the differential costs incurred by TNB from Jan 1, 2010 until Oct 31, 2011 amounting to RM3.07bil.
Azman said that TNB would start to pay market prices for the purchase of liquefied natural gas after September but prices that it has to pay for natural piped gas has yet to be determined by the Government.
“We have an assurance from the Government that whatever happens to the gas price there will be a pass through. We are not sure whether this pass through will come in the form of tariff increase or through a compensation mechanism with the Government,” Azman said.
He said that the Government would introduce an Incentive Based Regulation from 2014.
“It means that TNB's performance will be benchmarked with other key performance indicators. If we were to perform according to that said benchmark or even higher, then we will reserve a return from the industry weighted average cost of capital which is now deemed to be 8.5% and higher than what we have ever received so far. We are now getting only 4% ,” Azman said.
TNB recorded net profit of RM619mil for the third quarter ended May 31 compared with loss of RM179.2mil in the same period last year. Its revenue increased to RM9.19bil from RM7.98bil in the same quarter a year ago.
In the year to date period, net profit rose to RM3.19bil from RM1.3bil on the back of revenues rising to RM26.51bil from RM23.09bil respectively. This was due to the recognition of the alternate fuel cost differential compensation of RM2.82bil which had been recognised during the period.