TNB seeks other sources of coal supply

Posted on February 8, 2011. Filed under: Energy |

-The Star- Update adds latest damage estimates to Aussie coal and other economic sectors

KUALA LUMPUR: Tenaga Nasional Bhd (TNB), which has been impacted by the shortfall of coal due to the floods in Queensland, Australia, is looking at other sources for coal.

Queensland has been the world’s main supplier of coal but continued floods have played havoc with many corporations that rely either directly or indirectly on coal for their businesses, including TNB.

President and chief executive officer Datuk Seri Che Khalib Mohamad Noh said the company was currently buying coal from the spot market in countries such as South Africa.

“Next week, I will be going to Indonesia to see if we can negotiate a deal for the supply of coal,” he told reporters after signing a memorandum of understanding (MoU) with France-based Reseau de Transport d’Electricite’s (RTE) yesterday.

RTE was represented by its development & financial audit director Olivier Lavoine and the event was graced by French Ambassador Marc Barety.

Several analysts have lowered their earnings forecast on TNB this year.

Khalib said it (lower forecast) was expected because of the uncertainty of the supply volume of coal.

“There’s definitely going to be an impact on TNB’s bottomline,” he said, adding that TNB was trying ways to mitigate the impact from sourcing coal from other places as well as improving operational efficiency.

Khalid said so far, any cost upside was being absorbed by TNB but further costs might have to be passed on to customers.

On the impact of coal, he said a US$10 rise in the price of coal would have a 16% reduction in net profit.

Olivier Lavoine (second from left) exchanging the MoU documents with Datuk Seri Che Khalib Mohamad Noh. With them from left are RTE general manager Jean Philippe Bonnet, Marc Barety and TNB vicepresident Datuk Rozimi Remeli.

Currently coal was trading around the US$120 per tonne level.

On the MoU with RTE, Khalid said TNB hoped to reap significant benefits from the France-based company in terms of knowledge and expertise in the energy industry, ranging from technology transfer, consultancy and nuclear expertise.

Malaysia is planning to have its first nuclear energy plant by 2021.

Khalib said TNB expected to gain expertise from RTE in areas such as live substation and lines works, the study of interaction of grid characteristics with nuclear plants, gradual introduction and development of smart grid technologies and transmission system outage management.

“We are particularly interested in the area of live substation maintenance which is relatively new to the company despite the technology being adopted widely in most developed countries,” he noted.

Khalib also said TNB had so far trained and certified 15 of its technical personnel in live substation maintenance under a training programme conducted by RTE in 2009.

“Live substation maintenance works at TNB is still at its infancy and is currently being carried out only in the Klang Valley area and we expect to have live substations nationwide in about three years,” he said.

Khalid said the implementation of live substations would enable uninterrupted supply of electricity, which was vital for many businesses as well as households.

To date, TNB has six teams with 88 dedicated and competent personnel that carry out live-line maintenance throughout Peninsular Malaysia covering all transmission lines from 500kV down to 132kV.

“Having such collaboration increases our competency and keep us up-to-date with the latest technology. If we can position ourselves to conduct live substation maintenance, we can expand services in this region and probably other areas,” Khalib said.

He highlighted that building knowledge and expertise through the sharing or transfer of technology, was one of the ways identified to develop a competent, talented and productive workforce, needed to achieve TNB’s aspiration to be Asean’s leading power utility provider by 2015.

AP meanwhile reported from Canberra that Australia’s Deputy Prime Minister warned Tuesday the country’s economy could shrink due to extensive storm and flood damage and called for a new tax to pay for what could be the nation’s most expensive natural disaster.

Deputy Prime Minister Wayne Swan, the government’s ranking financial minister, told The Australian newspaper that a US$7 billion collapse in coal and farm exports as a result of recent flooding and a cyclone last week could cause the economy to contact in the first three months of this year.

“There is no doubt that the natural disasters will thump our economy in the first quarter of this year,” Swan said.

If Swan’s prediction proves true it would mark the first contraction of the Australian economy since 2008.

Australian Prime Minister Julia Gillard, right, shakes hands with a staff member at the Disaster Centre in Townsville, Australia Friday, Feb. 4, 2011. Drenching rain and the threat of flash flooding hampered recovery efforts Friday following one of Australia’s most damaging cyclones. Gillard said 4,000 troops were being made available to help with the cleanup operation, and more than 600 police and emergency services workers were fanning out to hard-hit towns with chain saws and heavy machinery to clear downed trees and other debris. (AP Photo/Ian Hitchcock, Pool)

Officials estimated last month that weeks of flooding in Queensland would cost the government at least $5.6 billion. The added cost of Cyclone Yasi which struck the Queensland coast last week has yet to be calculated.

Swan’s spokesman Adam Collins confirmed his comments.

On Thursday, Swan plans to introduce a temporary flood tax bill to Parliament that would raise $1.8 billion over a year to help pay for railways lines, bridges, ports and other installations damaged by the flooding.

The government said the flooding alone – which claimed 35 lives and damaged or destroyed more than 30,000 homes – could prove to be the nation’s most expensive natural disaster.

Australia scraped through the global economic crisis without a recession, thanks largely to continuing demand from Chinese and Indian manufacturers for Australian coal and iron ore. The economy recorded a single quarter of mild contraction at the end of 2008.

The government predicted in November, before the floods, that that economy would grow by 3.25 percent in the current fiscal year ending June 30.

 

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