Positive views on Tenaga Nasional

Government move to unbundle accounts for transparency hailed

PETALING JAYA: The Government's plan to unbundle Tenaga Nasional Bhd's (TNB) accounts for transparency is a positive step towards restructuring TNB and the power industry.

CIMB Research said though the news was not a surprise, this might be the first of many steps to a brighter future for TNB.

“The plan by MyPower Corp, the Government's power industry think-tank, is a positive step towards an eventual industry restructuring. Currently, TNB did not disclose segmental earnings for its generation, transmission and distribution businesses, making it impossible to benchmark TNB against its peers and identify its subsidised segments,” it said in a note yesterday.
MyPower is headed by Abdul Razak who is a veteran in the power sector.

MyPower Corp, which is under the purview of the Energy, Green Technology and Water Ministry, is headed by Datuk Abdul Razak Majid, a veteran in the power sector who was formerly TNB's senior vice-president of corporate affairs.

The unit's task involves restructuring the legal and regulatory framework of the industry to make it more equitable, competitive and liberalised for a level playing field.

CIMB Research said the planned change would enable TNB to enhance shareholder value by having a better grasp of internal performance and the foundation for a more robust cost-pass-through mechanism.

“When this is in place, Khazanah Nasional Bhd (TNB's investor) would be able to keep TNB as it stands, or embark on a restructuring exercise to de-list its unprofitable segments.

The Government had earlier denied that TNB would be split into generation, transmission and distribution segments but had tasked MyPower with separating TNB's accounts.

It was said that MyPower's primary role in this case was to determine which costs should come under TNB's electricity generation division.

By having individual accounts for each segment, TNB would be able to benchmark itself against its peers and help it identify which of the business segments are profitable and which are being subsidised.

Speculation has been rife about a proposal to split up TNB to re-organise the dominant electricity supplier and to help it fix its financial woes.

TNB recently said it faced an additional RM3bil in costs from having to look for alternative sources of fuel for power generation due to a shortage of gas supply.

Maybank IB Research had predicted that the national power utility would post dismal earnings for the fourth quarter ended Aug 31, 2011, and would continue to be dogged by gas supply issues.

The research house predicted that TNB would report a core net loss of RM230mil for the fourth quarter, which is slightly better than the RM478mil loss recorded in the third quarter.