TNB has been bleeding red ink of late as a crippling gas shortage takes its toll. It is now time to review those lop-sided concession agreements with the independent power producers, especially the first-generation IPPs.
Instead of gas, TNB now has to use much more expensive distillates, which cost five times more, as substitutes. It spent RM2.1bn on distillates in January-August 2011.
Check out TNB’s third quarter results for the 2011 financial year:
(Click to enlarge) Loss before tax for the third quarter was RM0.6bn compared to a profit of RM1.3bn for the same quarter last year.
Its fourth quarter performance could be even more disastrous.
It reportedly may now have to seek financing to cover even its operating expenditure.
Isn’t it time the power purchase agreements (PPAs) with the IPPs are renegotiated? In fact, a review is long overdue. Otherwise TNB’s major shareholders – representing the public via Khazanah (36 per cent), EPF (14 per cent) and Skim Amanah Saham Bumiputera (10 per cent) – would be splattered with red ink (poor returns).
Another classic case of privatisation of profits, socialisation of costs/losses.