Tenaga Nasional to be split into three units?

KUALA LUMPUR - The Government is looking into the proposal to split Tenaga Nasional Bhd (TNB) into the three units of power distribution, generation and transmission.

Speaking on the sidelines of Power-GEN Asia 2011/Renewable Energy World Asia 2011 conference, Energy, Green Technology and Water Ministry secretary-general Datuk Loo Took Gee confirmed that the matter was “under study”. She declined to elaborate.

“I think we need to be quiet and do our work well to present it to the market when we're ready,” Loo said when asked to comment on the matter.

Speculation is rife about a proposal to split up TNB in order to re-organise the dominant electricity supplier and to help it fix its financial woes.

TNB recently said it faced an additional RM3bil in costs from having to look for alternative sources of fuel for power generation due to a shortage of gas supply.

It has been reported that newly-established special purpose vehicle, MyPower Corp, will oversee TNB's “break-up” as part of the Government's effort to reform the country's power sector.

MyPower, which is currently under Loo's ministry, is headed by Datuk Abdul Razak Majid, a veteran in the power sector who was formerly TNB senior vice-president of corporate affairs.

The special unit's task involves restructuring the legal and regulatory framework of the industry to make it more equitable, competitive, liberalised and provide a level playing field. “MyPower will conduct studies based on nine aspects including power purchase agreements, governance issues, gas supply and tariff issues,” Loo said.

Asked if it was studying the deregulation of the power industry, she said: “Yes... this is also part of MyPower's task.”

Loo also said MyPower was reviewing the power purchase agreements with independent power producers.

In May, Energy, Green Technology and Water Minister Datuk Seri Peter Chin said the ministry was being assisted by MyPower and the Energy Commission to implement several changes to the country's electricity supply sector as identified by Khazanah Nasional Bhd on the need for reforms in the energy sector. “These changes are needed for a vibrant energy sector,” he had said.

Separate units: Speculation is rife about a proposal to split TNB in order to reorganise the dominant electricity supplier and to help it fix its financial woes.

Loo also said TNB was looking to have a clearer explanation of the respective costs they incur from the generation, distribution and transmission of electricity.

“We have to explain to the public how much of the tariff increase will come from generation, distribution and transmission,” she said.

Meanwhile, TNB chief operating officer and executive director Datuk Azman Mohd, speaking at the conference, said the electricity supply industry in Malaysia and generally in Asia faced multi-dimensional challenges.

He said these challenges included depleting indigenous energy resources, high demand growth, major infrastructure investment requirements, escalating and volatile fuel prices, public demand on the issues of environment.

“This is all happening as consumer expectations are becoming increasingly sophisticated and unpredictable. This calls for prudent risk management and planning to be put in place, which involves finding a balance between project development and its associated risks, and exploring alternative supply options and technologies,” Azman said.

He said TNB had developed biomass, solar power and solar-wind hybrid systems to help spur the renewable energy development and research.

- The Star