Tenaga ready to buy gas from open market by 2012

BANGI, Selangor (Dec 13): TENAGA NASIONAL BHD [] (TNB) is ready to purchase gas from the open market by August 2012 once the regassification terminal in Malacca is completed.

TNB chief executive officer and president Datuk Seri Che Khalib
Mohamad Noh said on Tuesday the power company had held talks with
traders and suppliers including major multinationals such as ExxonMobil
and Royal Dutch Shell to ensure a secured supply of gas.

However, he said the supply of gas from the open market, secured
based on international market price, would not necessarily be translated
into higher tariff rates for domestic and industrial consumers.

Che Khalib said TNB had put forward several options to the government.

On Dec 1, Petroliam Nasional Bhd (Petronas) said it would shoulder
part of TNB’s higher operational costs caused by the shortage of gas.

The Edge FinancialDaily reported that TNB had received a
letter from the government about a fuel cost sharing mechanism where
Petronas, TNB and the government will equally share the RM3.07 billion
the utility company incurred in cost overruns from Jan 1, 2010 to Oct
31, 2011.

The lifeline was thrown to TNB, which is swimming in a sea of red ink
due to high costs, as it had to seek alternative fuel to make up for
the shortage of subsidised gas supplied by Petronas to generate energy.
TNB posted a net loss of RM453.9 million for 4QFY11 ended Aug 31.

Under the cost sharing mechanism, TNB will recoup RM2 billion, or
36.6 sen per share, of the cost overruns it incurred in the 22-month
period.