Wednesday, September 21, 2011

Tenaga ... Sep11

Faced with a dire gas shortfall, Tenaga Nasional Bhd (TNB), has to spend an additional estimated RM3 billion on power generation for 2011, while having to raise financing for operations as the only solution to sustain itself.

If no immediate solution was found to address the gas crisis, it would be the first time then, that the company was going to the market to raise money for operations.

Previously, all fund raising was for capital expenditure. The gas curtailment exercise by Petronas has prompted TNB to buy fuel distillates which cost five times more than gas, to keep generating electricity. Power plants in the country were not made to burn distillates. To generate 1,000 MGW using the alternate fuel, it costs us about an extra RM10 million daily.

For the whole of 2011, the extra cost for power generation, will be about RM2.6 billion at the minimum. At the moment, Tenaga is using internal reserves which is draining out fast. Its debt level which stood at RM32 billion in 2001 is down to RM18 billion, and this gives it room to borrow but it can't sustain itself for long.

TNB has also lobbied for the additional fuel costs to be shared with two other industry players, Petronas and independent power producers. In Aug 2011, the utility giant submitted a proposal for cost sharing as an immediate solution to the government but there has been no decision yet.
On average, TNB is getting about 900 million standard cu ft of gas per day (mmscfd), from the usual rate of 1,250 mmscfd for 2011. The power sector is entitled to about 1,350 mmscfd for 2012.

Tenaga hopes there would be sufficient gas supply by July 2012 when Petronas' re-gasification terminal for Liquefied Natural Gas in Malacca is ready.

Tenaga is not looking at passing down the additional cost to the consumers.

Meanwhile TNB will raise RM5bil from a 20-year ringgit-denominated sukuk issuance at the end of Oct 2011 to finance the extension of its Janamanjung power plant. This comes at a time when the national utility company is facing a severe gas supply shortage that may result in it incurring additional fuel cost.

In April 2011, TNB awarded French group Alstom a 650-million-euro (RM2.8bil) contract to build the Janamanjung 1,000-MW supercritical coal-fired power plant. Alstom will engineer, procure, construct and commission a 1,000-MW steam turbine, a generator, a supercritical boiler and auxiliaries. The plant is expected to come online in 2015.

The plant will be the single largest in South-East Asia and will produce enough electricity to power nearly two million households in the country.

The project follows TNB's 1999 contract with Alstom to build the currently operating 2,100-MW Manjung coal-fired power plant.

Meanwhile, TNB is still bogged down by cost concerns whereby it may incur additional fuel costs of up to RM3bil.

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