TNB’s 3Q net profit falls 14% to RM889m

by ANIS HAZIM / pic MUHD AMIN NAHARUL

TENAGA Nasional Bhd’s (TNB) net profit fell 14% to RM888.9 million for the third quarter ended Sept 30, 2022 (3Q22), from RM1.03 billion a year ago.

This is on the back of RM19.07 billion in revenue, up 47% from the same period a year ago, mainly due to the higher under-recovery of imbalance cost pass-through (ICPT) of RM6,109.6 million compared to the same quarter last year which was at RM1.31 billion, the company said in an exchange filing on Nov 23.

For the first nine months, the company posted net profit of RM2.65 billion, down 4.7% from a year earlier while revenue was up 46% to RM53.87 billion.

The higher revenue was mainly due to the higher under-recovery of ICPT of RM15.92 billion compared to the corresponding period which was RM1.3 billion.

The lower net profit for the nine months was mainly contributed by the higher foreign currency translation losses, finance cost and tax expenses which includes additional tax on Cukai Makmur for FY22 amounting to RM414.3 million.

Earnings per share slipped to 15.50 sen from 17.57 sen previously, according to its exchange filing.

In a separate statement, TNB president/CEO Datuk Indera Baharin Din said the surge of the under-recovery of ICPT for the first nine months under review was due to the current high fuel price environment.

In spite of the current high fuel price cost environment, TNB said the ICPT mechanism under the Incentive Based Regulation (IBR) allows it to remain neutral as it allows the group to pass through any variations in generation cost in the form of rebates or surcharges. The ICPT is a six-month pass-through mechanism of variations in uncontrollable fuel cost and other electricity generation-specific costs incurred by the utility for the preceding six-month period.

For the ICPT recovery period from July to December 2022, it said the government has agreed to reimburse TNB the ICPT cost amounting to RM5.8 billion.

“We are pleased to share that we have received to date a total of RM4.8 billion ICPT cost recovery for July to November 2022 claims from the government,” he said.

In supporting its energy transition initiatives, Baharin said TNB is accelerating its efforts by retiring selected coal plants earlier than planned and repowering fossil-fired power plants with new green technology.

“In August, we announced our intention to work with Petronas on joint feasibility studies in the areas of Hydrogen and Carbon Capture with a view to unlock the commercial value of at least RM10 billion up to 2035.

“In addition, we have also received a Letter of Intent (LoI) from the government for the development of a 2,100MW Combined Cycle Power Plant in Kapar, Selangor. The new gas-fired power plants will be developed with future hydrogen technology as an alternate fuel to gas,” he said.

He said TNB will commence research and development (R&D) on green hydrogen production with more efficient electrolysers that aim to reduce the levelised cost of energy (average cost per unit generated) for green hydrogen.

For electric vehicles (EV), as a key enabler in building the ecosystem in Malaysia, TNB said it is committed to ensure that its infrastructure, which spans across the whole of Peninsular Malaysia, is EV-ready.

“We have pledged to install DC Fast Chargers along our highways, to address range anxiety. However, the volume of EVs in Malaysia can only increase once more affordable models can be offered to the masses,” he said.

TNB’s shares were last traded at RM8.42 or two sen lower, valuing the group at RM48.44 billion.