KUALA LUMPUR (Sept 15): Utility firm Tenaga Nasional Bhd (TNB) said it has received a sum of RM1.9 billion from the federal government for the imbalance cost pass-through (ICPT) mechanism.
The amount comprised the latest tranche of RM1.6 billion, adding on to another RM300 million received previously, a company spokesperson said.
A back-of-the-envelope calculation shows this will offset 19.4% of TNB's outstanding under-recovery of the ICPT totalling RM9.81 billion as of end-June.
The huge ICPT under-recovery was mainly due to the sharp rise in coal prices since late last year, amid a demand surge globally and as Europe sought alternative fuel sources as replacement for the increasingly expensive gas amid the Russia-Ukraine conflict.
The ICPT sum represents additional fuel costs above the reference prices set by the Energy Commission that TNB has paid in advance. This amount should be recouped from consumers through higher electricity tariff.
TNB data shows that fuel costs in the first half of 2022 (1H22) for the electricity industry in Peninsular Malaysia stood at RM19.04 billion, up 43.3% from RM13.29 billion in 2H21, and higher by 135.3% from RM8.09 billion in 1H21.
However, the electricity tariff has been unchanged this year. Domestic users have continued to enjoy two sen/kwh rebate, while non-domestic users are imposed a surcharge of 3.7 sen/kwh.
Comparatively, analysts estimated the non-domestic surcharge should be 14 sen/kwh to reflect 1H22 fuel costs if domestic users are excluded.
Following the tariff adjustment freeze, the government also announced that it will be paying TNB RM5.8 billion in electricity subsidies for the public.
As such, the RM1.9 billion payout should provide some relief to the utility firm's tight cash flow position. Recall that TNB's net operating cash flow shrank by 79% year-on-year in the six months ended June 30, 2022 (1HFY22) to RM1.89 billion, from RM9 billion in 1HFY21, to the point where the government had to step in to guarantee RM6 billion of TNB's financing for fuel procurement purposes.
Any subsequent electricity tariff decision would be based on the ICPT mechanism "at year end", Deputy Energy and Natural Resources Minister Datuk Ali Biju told the Parliament on Aug 11. He added that the total electricity subsidies this year might reach RM6.51 billion, Bernama reported.
The headwind continues as coal prices continue to average higher in the third quarter, with Australia Newcastle coal contracts touching a new high of US$463.75 (RM2,102.85)/tonne on Sept 5, up 205% from US$151.75/tonne at the start of the year.
Shares of TNB have recouped losses since dropping below the RM8-mark in July. At the time of writing, the counter traded down one sen or 0.11% at RM8.77, giving it a market capitalisation of RM50.45 billion.