Tenaga: No power from Bakun

Posted on April 21, 2010. Filed under: Energy |

-The Edge Financial Daily-KUALA LUMPUR: Tenaga Nasional Bhd said it would not be sourcing power from the Bakun hydroelectric dam in Sarawak and has mapped out alternative plans to meet the increasing power demand in the peninsula.

“There will be no transmission from Sarawak in 2015, neither will there be in 2017.

“Bakun’s (and Murum’s) power, according to Sarawak government, is needed for the state. We are… we were just a potential buyer, and since there is no capacity to buy, we will not be buying from Bakun.

“Bakun, as we know now, will not be utilised for semenanjung,” said chairman Tan Sri Leo Moggie at Tenaga’s second quarter (2Q) financial results briefing.

This effectively means the proposed RM10 billion undersea cable project is unlikely to take off. Tenaga and Sarawak Energy Bhd were also supposed to lease the Bakun dam from the owner, Sarawak Hidro Sdn Bhd.

Bakun is scheduled to start firing its first turbine in 4Q this year and once fully operational by late 2011, it would be able to produce up to 2,400mw. The Murum project will generate 944mw of power.

The latest development increases the possibility of two aluminium smelters being set up in Sarawak — one by Rio Tinto Alcan together with the Cahya Mata Sarawak group and the other by GIIG Holdings Sdn Bhd with Aluminium Corp of China Ltd. GIIG Holdings is a vehicle of Tan Sri Syed Mokhtar Al-Bukhary.

Moggie said Tenaga was ‘seriously’ looking at expanding its Manjung plant in Perak, which he describes as the best option to generate more power by 2015.

Asked whether there was  a possibility of power transmission from Sarawak beyond 2017, he said: “Sarawak has an advantage of sizeable hydropower reserve.  If these reserves were developed in future, obviously we will have to look at them. But until that happens, it doesn’t require us to do specific planning.”

It has been reported that Tenaga is seeking to increase the Manjung plant’s capacity by another 2,000 mw from 2,100mw now, at an estimated cost of at least RM6 billion.

Tenaga posted a net profit of RM1 billion in its second quarter ended Feb 28, 2010 (2QFY10), up 48% from RM674.6 million a year earlier, which was within or above market expectations. The better performance was underpinned by higher electricity demand, a more stable generation cost and foreign exchange translation gain.

Revenue rose 7% to RM7.39 billion from RM6.91 billion. Earnings per share rose to 23.05 sen from 15.56 sen. It declared a six sen per share dividend.

The stronger ringgit against the US dollar and yen contributed to the forex translation gain of RM144.4 million compared to a loss of RM97 million in the corresponding period last financial year. For the first half, the forex translation gain totalled RM99 million.

As at Feb 28, 2010, its borrowings were RM22.38 billion compared with RM22.62 billion as at Aug 31, 2009. Of the borrowings, RM5.57 billion were in yen and RM5.125 billion in US dollars with the rest in ringgit.

Its first half earnings were RM1.71 billion, a turnaround from a  net loss of RM269.5 million a year earlier. Revenue rose 2.8% to  RM14.727 billion from RM14.321 billion.

Sales of electricity in the peninsula rose 3.3% or RM436.3 million. Demand grew 8% year-on-year.

The second quarter saw its operating expenses decline by RM13.4 million from RM6.18 billion to RM6.17 billion, mainly due to more stable generation costs as coal prices remained under control.

Its president and CEO Datuk Seri Che Khalib Mohamed Noh said coal prices were about US$82 (RM263.22) per tonne during the quarter under review. He expects coal prices to trade at an average of US$91 to US$92 per tonne for the year.

Based on a recent analysts note, TNB has locked 45% of its coal requirement at US$60 to US$75 per tonne for 2010.

Che Khalib also expected power demand to continue its uptrend in 3Q and 4Q, but added that the surge “would not be as high” as seen in 2Q.

In 2Q, sales of electricity in Peninsular Malaysia increased by 7.5% or RM476.2 million and the units sold registered a growth of 13.8% compared with the corresponding period.

“We would probably see a high single digit in 3Q and in 4Q, a middle single digit,” added Che Khalib.

He said apart from good demand, the stronger ringgit against the US dollar would also help boost the company’s earnings. Coal is traded in the greenback and accounts for almost 30% of Tenaga’s generation mix.


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