Malaysia's power giant secures tariffs, subsidy<\/p>\n
KUALA LUMPUR (AFP): Malaysia's power giant Tenaga Nasional
\nBhd. yesterday secured an earnings boost when the government
\napproved an eight-percent rise in electricity tariffs despite
\nconsumer opposition.<\/p>\n
Energy, Telecommunications and Post Minister Leo Moggie said
\npower tariffs would be raised by an average of eight percent, or
\n1.8 sen (0.72 cents), to 23.5 sen a kilowatt\/hour effective
\nThursday.<\/p>\n
The government also agreed to cap the price of gas sold to
\nTenaga and independent power producers (IPP) at 6.40 ringgit per
\nmillion British thermal unit (mmbtu) until 2000, Moggie said.<\/p>\n
"The tariff increase is unavoidable given the high cost of
\npower generation based on fuel, development, machinery and
\nequipment, loans and other factors," he told reporters.<\/p>\n
"A major portion of equipment for power supply is still
\nimported and Tenaga is facing pressure in terms of development
\nand operational costs. The present tariffs do not reflect the
\ntrue cost borne by Tenaga," he said.<\/p>\n
Moggie said the new rates were reasonable and dismissed
\nsuggestions that they would unduly burden consumers or affect
\nMalaysia's competitiveness compared to other countries in the
\nregion.<\/p>\n
"The impact on production cost is minimal as electricity makes
\nup less than five percent of total operating cost for most
\nindustries. Most sectors would see a mere increase in cost at
\nbelow one percent," he said.<\/p>\n
On the cap on gas prices, Moggie said it was aimed at reducing
\nfuel cost for the energy sector and avoiding higher tariff rates
\nas the current gas cost is pegged at around seven ringgit per
\nmmbtu.<\/p>\n
National oil company Petroliam Nasional Bhd. would have to
\nbear the additional costs beyond the price cap.<\/p>\n
Moggie said Malaysia's electricity demand was expected to rise
\nby 12 percent annually until 2000 from 13 percent last year.<\/p>\n
Analysts said the tariff increase was in line with market
\nprojections and said the news would help boost the local bourse,
\nwhich had recently been depressed by a host of negative domestic
\nnews.<\/p>\n
Tenaga stock was 70 sen higher at 11.60 ringgit on the local
\nbourse Wednesday following the tariff announcement.<\/p>\n
Hike<\/p>\n
"The eight-percent hike would add some 250 million ringgit to
\nTenaga's revenue this year and another 900 million ringgit next
\nyear," Elsie Lim, power analyst with South Johore Securities,
\ntold AFP.<\/p>\n
Lim said the cap on gas charges would stabilize fuel costs and
\nboost the earnings of Tenaga and independent power producers in
\nthe long run.<\/p>\n
Publicly-listed Tenaga generates nearly 70 percent of
\nelectricity production and has a monopoly on power transmission
\nand distribution across peninsular Malaysia, which contains more
\nthan 80 percent of the population.<\/p>\n
Tenaga, which had raised US$800 million in overseas bond last
\nweek, had said an increase in power tariffs was vital for the
\ncompany to remain financially viable.<\/p>\n
It plans to invest 18 billion ringgit between now and 2002 to
\nexpand and upgrade its infrastructure in order to cope with
\nelectricity demand in the rapidly industrializing country.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/malaysias-power-giant-secures-tariffs-subsidy-1447893297",
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