This article first appeared in The Edge Malaysia Weekly on October 24, 2022 - October 30, 2022

Tenaga Nasional Bhd is the dominant electricity player in the country. It has the largest number of power plants, controls the transmission lines and distribution system, and is the sole off-taker of electricity.

Its major shareholder is Khazanah Nasional Bhd. The government has a golden share in the company and Tenaga is a vital partner in the government’s plan to maintain the electricity ecosystem. 

Considering its dominant position and its close nexus to the government, Tenaga does not need partners to build and operate new power plants.

Which raises the question as to why it has entered into a joint venture with Widad Business Group Sdn Bhd to build a power plant in Kapar, Selangor. It could have financed, constructed and commissioned any power plant on its own.

In an announcement last Friday, Tenaga said that its wholly-owned subsidiary, TNB Power Generation Sdn Bhd, had received a letter of intent (LOI) from the Ministry of Energy and Natural Resources to develop a 2,100mw combined cycle power plant in Kapar. It stated that the project would be carried out in collaboration with Widad Business Group and was scheduled for commercial operation in 2031.

That means the plant is slated to be ready for operations only nine years from now. 

Why did the ministry award the LOI nine years before its commercial operations date? Does the power plant take such a long time to plan, construct and commission?

The last time a power plant was awarded way ahead of its commissioning date was in 2014. That time, the ministry awarded a 2,000mw gas-fired power plant to 1Malaysia Development Bhd (1MDB) that was scheduled for operations only in 2021. The award was done without a competitive bid.

In Tenaga’s recent announcement, there is no indication if the power plant was awarded through a competitive bid. It only stated that the greenfield power plant was aligned to its Net Zero Emission Aspiration by 2050 and would be located near its existing power plant in Kapar.

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