November 21, 2017 Read More →

Tenaga Nasional Aims to Raise Annual Return on Assets

Asia Nikkei:

Tenaga Nasional, Malaysia’s national electric utility firm, is seeking to raise its return on assets, pursue renewable energy projects and lift non-regulated revenue to help offset a slowing domestic growth.

The company is targeting return on assets of 6.0%-6.4% and up to 4.0 billion ringgit ($0.97 billion) in revenue from non-regulated business this fiscal year to Aug. 31, 2018 Tenaga Nasional said in its latest annual report. The company also aims to cut its cost per unit to between 35.5 sen per kilowatt-hour and 36.5 sen per kilowatt-hour, it said.

That compares with a 5.4% return on asset and 3.3 billion ringgit of non-regulated revenue in the last financial year. Cost per unit was 36.60 sen a kilowatt-hour in FY17.

“As a key component of our long-term strategy, we will continue to invest in renewable energy capacity going forward, both locally and abroad, and continue to prepare bids for tenders in 2018 with a focus on solar and wind projects,” Tenaga Nasional said.

Tenaga Nasional has a near monopoly in electricity distribution in Malaysia, a highly-regulated market where the state closely-manages a system of tariffs and subsidies to keep a lid on energy prices. To increase revenue from non-regulated business, Tenaga Nasional said it will target foreign acquisitions, and grow other businesses such as maintenance and cable manufacturing.

Tenaga Nasional’s recent business goals come at a time of rising coal prices and slowing electricity sales in home market, which the company said was due to sluggish demand in the industrial sector and a shift in consumer behaviour in adopting more energy efficient measures.

The company produced a total 14,510.9 megawatts of power in the last fiscal year with coal and natural gas making up 78% of its overall capacity. Renewable sources only make up 264.12 megawatts, or less than 2%, of its generation capacity. The remainder comes from oil and hydel sources.

The average price of coal rose to $72.7 per ton in the last financial year from $55.7 a ton a year earlier. Since the start of 2016, prices of internationally-traded thermal coal have doubled to just under $100 a ton, according to Institute for Energy Economics and Financial Analysis.

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