TNB to diversify further into RE, says CEO Azman

All efforts made to meet the target to be the top 10 global utility firm by 2025 will be guided by TNB’s Strategic Planb


Tenaga Nasional Bhd (TNB) is on track to be the top 10 global utility firm by 2025 as it increases global presence and diversifies further into the renewable-energy (RE) sector.

TNB president and CEO Datuk Seri Azman Mohd said all the efforts made to meet the target will be guided by its Strategic Plan (2017-2025), anchored on key pillars designed to achieve continued and sustainable growth.

TNB is currently exploring investments in both developed and emerging economies, to expand a range of its businesses.

Developing markets, he said, present abundant opportunities for the firm due to opening or expansion of economic sectors.

“We are also not ruling out developed economies, where policies and industrial regulations are well structured for the industry,” he told reporters after TNB’s AGM yesterday.

Azman said TNB expects developing markets to take up to 70% of its geographical portfolio, as the utility monopoly eyes to venture into new countries.

Without naming any particular markets, Azman said the investment should fit into TNB’s risk appetite and it should be able to deliver sound returns to the shareholders.

Azman also said electricity sales growth in Malaysia is expected to continue to slow in line with the sales growth seen over the last three years.

Electricity consumption used to be 1.1% of the country’s gross domestic product (GDP), however, he said the numbers have been declining since the country gradually moves out from being a wholly industrial nation.

Meanwhile, on RE, TNB chairman Tan Sri Leo Moggie said TNB will continue to invest and bid for projects, both locally and abroad, as a key component of its long-term growth strategy.

He said TNB’s major focus for RE tenders next year would be on solar and wind projects.

“We have also made bids for another large solar photovoltaic (PV) plant in the Middle East and is expecting an outcome in early 2018,” he said.

Moggie said with an aspiration to be the Asean leader in RE, TNB is working closely with the government to deliver the country’s RE portfolio through investments in solar, wind, biomass, biogas and mini-hydro projects.

On capital expenditure (capex), TNB CFO Datuk Fazlur Rahman Zainuddin said the firm expects to fork out up to RM10.5 billion in capex next year.

From the total, about RM6 billion-RM7 billion would be recurring capex, while RM3.5 billion would be allocated for annual expenditure.

The company, he said, does not foresee an electricity-tariff hike in a revision due next month.

“We don’t foresee major changes. It is still very much in the hands of the government to make that decision (on hike).

“Normally the decision on base tariff is done right before the beginning of the regulatory period, which is expected in January, so we expect the announcement will be made anytime this month,” he added.

The current average selling price is 39.5 sen/kilowatt hour.

The rate is reviewed every three years and the last revision was made in 2014.

On coal prices outlook, Fazlur said it would likely moderate over the next three years and expected to be slightly lower than the current high level.

“Generally, it will moderate because the expected consumption of coal is not going to push the price up too much as the market shifts towards alternative fuels,” he added.