Critical shortage of gas supply

Kuala Lumpur: Malaysia is running its power plants close to breaking point due to a prolonged shortage of gas supply, which is also hurting the state-owned national utility.


Although the supply shortage was due to be resolved in June, the situation is still the same now as the power sector receives a third less gas than what it's supposed to get, said Tenaga Nasional Bhd (TNB) president and chief executive officer Datuk Seri Che Khalib Mohamad Noh.

"It can't go on like this. Probably we can avert (any problems) this time but I don't know how many times we can be lucky," he told Business Times in an interview yesterday.

The power sector has been allocated 1,350 million standard cubic feet per day (mmscfd) by Petroliam Nasinal Bhd (Petronas) but supply has consistently been below 1,000 mmscfd since the start of 2011. Supply is now hovering around 900-950 mmscfd and it even hit a low of 595 mmscfd at one point.

The shortage is mainly due to frequent Petronas' maintenance at its gas facilities.

"The supply is still not stable. It is far less than what we need. This is not sustainable," Che Khalib said.

Apart from having to spend more to buy alternative fuels like distillates and medium fuel oil to run power plants, the shortage could also hurt the country's power supply if it is not fixed soon.

Already, coal plants are now running flat out at maximum capacity and TNB had to forgo maintenance at some plants just to ensure continuous electricity supply. In some cases, it had to ask for a special waiver from the government because not carrying out scheduled maintenance would be a breach of industrial requirements.

TNB also has to use distillates for its gas plants. This fuel costs five times more than gas.

"Gas plants are not designed to run on distillates for a long time because it will have a negative impact," he said.

Burning distillates for gas plants would also stress the equipment. This means the plants must be maintained more often.

Although TNB can contend with one plant taken off the national power grid, it is worried about breakdowns at multiple plants due to the stress put on the equipment. But it is working hard to avoid this.

In fact, Malaysia literally ran out of distillates on June 17 this year due to TNB's purchases and Che Khalib said he had to make frantic calls to oil companies for extra supply from abroad.

"We have to ensure the country has electricity at any cost."

And the cost has been quite high for TNB. In July, it posted its first quarterly loss in almost three years because of higher fuel costs.