Tenaga has posted a loss before tax of RM0.8 billion for its first quarter ended 30 November 2008 compared to a profit before tax of RM1.6 billion for the same period in 2007.
The amazing thing is that it made a forex translation loss of RM1.4 billion in the first quarter. That’s right, RM1.4 billion in one quarter.
And now it wants to take over the jinxed and problem-plagued Bakun Dam from Sarawak Hidro. Good luck, Tenaga – you will need it.
Tenaga explains that its forex loss was due to its exposure to Yen and the US dollar, against which the ringgit has weakened. (Tenaga had taken out over RM10 billion in term loans – mainly 30-year and 5-year Japanese term loans hedged against currency option agreements and cross currency swaps to reduce exposure to forex losses.)
Observes one analyst, “Same thing happened to them back in 1997/98 when they got walloped because of all their yen-denominated loans. Looks like they haven’t learned one bit from that episode.”
That’s not all. It’s operating cost rose 49 per cent (despite higher revenue growth of 28 per cent). The funny thing is that coal prices began falling drastically from August. So Tenaga may have been caught with forward contracts during the quarter ended Nov 2008, which it may have entered into at the height of the commodities bubble. If that’s true, it says a lot about their analysis of market conditions as even back in June 2008, it was clear that the commodities boom was a bubble that could not be sustained.
And there’s worse to come: Tenaga’s capacity payments to the private electricity companies (for electricity that Tenaga doesn’t need) are expected to rise further with the commissioning of 1,400MW from the Jimah power plant in 2009.
“(Capacity payment) per month would be RM30 million for this year. For coal-generation plants, for the first year, we pay 50% of its full capacity charges. The full capacity charges will start from 2011, which would amount to RM1 billion for the full year,” Tenaga CEO Che Khalid was quoted as saying in The Edge.
Mind you, demand for power in the country is actually dropping with the economic recession. But Tenaga has to pay more to the IPPs for electricity it doesn’t need. Amazing, isn’t it?
So why should it bother you if Tenaga makes losses? Well, the main shareholders of Tenaga are the Finance Ministry (Khazanah) – 38 per cent; EPF – 14 per cent; and Amanah Saham Bumiputera – 9 per cent.
Sime Darby was supposed to take over Bakun but then wisely backed out, leaving us (via the Finance Ministry/Khazanah/EPF’s stake in Tenaga and EPF loans for Bakun construction) holding the Bakun baby, which was the brainchild of Mahathir.
Shouldn’t the Tenaga CEO’s pay be linked to performance? After all, these CEOs and political leaders often say that workers’ wages should be linked to productivity…