Last Saturday, On The Star's Bizweek Cover feature on Tenaga National Bhd. TNB chief Datuk Che Khalib Mohamad Noh stated that : “We have already reached a critical level for survival ... For the last three years, we have been surviving on borrowed money,” Toss in an annual capital expenditure requirement of close to RM5bil, hefty debts of about RM30bil, and rising coal prices, and the push for a tariff restructuring becomes more compelling.
TNB Chief Datuk Che Khalid added in the interview by The Star : "At the moment, we have reached a level where every month, we are borrowing money to keep the company afloat because the total revenue that we collect is not even enough to cover the capex and servicing of debts. That's our situation today. "
On Sunday, Sin Chew Daily reported that Energy ,Water ancommunicationon Minister Datuk Seri Lim Keng Yaik Independent Power Producer (IPP) have 40% excess capacity of which the idealing cost has to babsorbeded by Tenaga. As there is 40% excess capacity of idealing power, there will be no new IPP in the next 10 years.
Thus, there is a contradict statement. If there is a 40% excess capacity, why is inecessaryry for further capital expenditure (CAPEX). Which TNB chief claim unable to cover by it revenue and stated as a reason for tariff hike. They should be no more CAPEX in the next 10 years as TNB has excess capacity.
For my knowledge, I only know there is only two possibility of CAPEX. One is for capacitexpansionon and the other is for replacement of existinassetsts.
If you have simple accounting knowledge. You would know that CAPEX on replacement of old machine should have been cover by it profit if TNB has depreciated iassetsts as required by accounting standards and the company make profit.
Based on Energy, Water and Communication Minister statement. CAPEX on capacity expansion is not required as it 40% excess capacity.
Even if TNB required expansion. Majority of the company used borrowing for capacity expansion. As a power analyst stated on The Star's bizweek that " “Utilities all over the world carry huge debts. For TNB, the option of refinancing its debts is available and this it has done and can continue to do, even if its debts are lumpy. TNB’s loans are sovereign guaranteed which significantly lowers its cost of borrowing. So that’s not so much of an issue to me.”
Thus, they is no basis for TNB tariff hike. Clearly, the purpose of tariff hike is for increase in shares price and gain on stock option by Tmanagementagment.
Either TNB chief or the Minister is wrong. Both of them own us an explanation. I do not oppose government recent fuel increase. However, I strongly opposed a tariff hike by TNB. My reader know that actually I hope TNB can be delisted from Bursa Malaysia.
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