Powering Up – BizweekPrint this page
Date: 18 July 2005
With no new generation capacity coming on-stream until 2007 and electricity demand expected to grow at a rate of 7%-8% over the next couple of years, observers say Tenaga’s high reserve margin of about 40% currently should drop to a comfortable level of about 30% by next year. This will have the effect of reducing the company’s operating cost and boosting its bottomline. Tenaga is regarded as the bright spot in the sector currently because there is a growing possibility that there could be a rebalancing of electricity tariffs by early next year. However, several analysts point out that any moderation in the pace of economic growth going forward could alter the outlook for the utility. Apart from that tariff wild card the sector is not expected to hold any surprises until the next phase of planting up. Planning for the next plant-up phase could start as early as next year if hydropower plays a more prominent role in future generation activity. Energy Commission chairman Datuk Dr Mohd Annas Mohd Nor says plans for plant-ups beyond 2011 would involve a longer time frame than the current 5 to 6 year lead time as the Government is looking into the possibility of hydropower playing a bigger role in capacity generation. He point out that while most hydro potential in Peninsular Malaysia has been developed, Sarawak still has over 20,000 megawatt of hydro potential to offer. The pricing of gas could change at the end of the year, as the gas supply agreements between Petronas and Tenaga as well as the IPPs will be up for review then. Many observers deem that there is room for an upward adjustment in gas price as the market rate is about RM26/60/mmbtu.