Reform electricity supply industry to attract investments, says academic

 

Renato Lima de Oliveira said reforming the electricity supply sector would facilitate the emergence of new business models and investments in the country. (Bernama pic)

PETALING JAYA: The electricity supply industry needs to be reformed to make it more competitive as it is too centralised and dominated by state-owned or linked enterprises, says an academic.

Renato Lima de Oliveira, a fellow at the Institute for Democracy and Economic Affairs (IDEAS), said the sector’s biggest player, Tenaga Nasional Bhd (TNB), owns about 50% of the electricity generation capacity, accounting for the bulk of energy consumption in the peninsula.

This is followed by Malakoff Corporation Bhd owning 20.64%, YTL Power International Bhd (2.24%), Edra Power Holdings Sdn Bhd (22.04%), Petronas (3.33%) and others (2.29%).

Renato Lima de Oliveira.

De Oliveira also said the sector’s regulatory framework has legacy components resembling what other countries did throughout the 20th century.

“However, it is not a type of framework compatible with the idea of attracting investments on the scale needed to decarbonise the energy sector and reach net-zero aspirations,” he said at the launch of his report on competitive neutrality in the Malaysian power sector.

De Oliveira cited as an example the limitations of the Electricity Supply Act 1990, which allows private enterprises to generate electricity for their use but not directly sell or allow it to be channelled via the national grid.

He said this limited opportunities for corporate power purchase agreements and energy export. Such a situation would prevent industrial consumers like factories from directly sourcing energy from producers in other states and channelling it via the national grid.

De Oliveira said reforming the sector would facilitate the emergence of new business models and investments in the country.

However, he admitted that reforms via decentralising and opening up the sector may be complex because of its importance.

“But it’s the right way to go to deliver on (Malaysia’s) environmental commitments to hit net-zero targets by 2050 and encourage the growth of renewables as aspired in the National Energy Transition Roadmap.” - FMT