Save Sandakan

“Massive Natural Heritage Destruction at Seguntor – Site for the Sandakan Coal – Fired Power Plant”

Higher Coal Prices Eat into TNB 9-Months Net Profit

Posted by Save Sandakan On August - 11 - 2009

People of Sabah – Stop dreaming/wishful thinking: Using coal doesn’t mean your electricity bill will be cheaper!!

Tenaga Nasional Bhd (5347) posted one third drop in net profit before foreign exchange (forex) translation in the first nine months as it had to pay more for coal.

Net profit for the nine months to May 31 2009 was RM1.69 billion while revenue rose 18.4 per cent to RM21.32 billion, largely due to two tariff reviews in July 2008 and March this year.

Nevertheless, he said TNB will seek to review its tariffs “up or down” if the prices of gas and coal move likewise.

[ Meaning: If coal gets too expensive, TNB will try to pass the costs over to the consumers/ask the consumers to pay for it, rather than just let it eats up TNB’s profit margin. ]

Leo Moggie said TNB is able to secure lower coal prices in the third quarter at about US$80 (US$1 = RM3.55) per tonne. But it still had to pay a higher contracted coal price for the nine months at an average of US$94.3 a tonne…….read more below :

http://www.btimes.com.my:80/Current_News/BTIMES/articles/tyby/Article/

By Zuraimi Abdullah

Published: 2009/07/23

Tenaga Nasional Bhd (5347) posted one third drop in net profit before foreign exchange (forex) translation in the first nine months as it had to pay more for coal.

Net profit for the nine months to May 31 2009 was RM1.69 billion while revenue rose 18.4 per cent to RM21.32 billion, largely due to two tariff reviews in July 2008 and March this year.
However, this was partially offset by a 25.2 per cent rise in operating expenses from RM14.87 billion to RM18.62 billion in the three quarters under review.
Demand for power was weak during the nine months but TNB chairman Tan Sri Amar Leo Moggie is happy with the growing input in the third quarter.
He expects the momentum to continue in the last three months of the utility giant’s year that ends on August 31 2009.
“Demand for the third quarter grew 3.9 per cent compared with the second quarter, and even the industrial sector reported a positive growth of 1.5 per cent. A new peak demand level has been recorded in the peninsula on June 17 at 14,029MW,” Leo Moggie said at a briefing on TNB’s interim results in Kuala Lumpur yesterday.
President and chief executive officer Datuk Seri Che Khalib Mohamad Noh, however, said the full-year electricity demand would be “in a negative territory”.
TNB saw demand contracting by 3.7 per cent in the first nine months.
Analysts said a one percentage increase in demand should increase TNB’s earnings by about 4 per cent.
TNB officials have maintained that electricity demand as well as fuel and IPP (independent power producer) costs are the key drivers affecting its earnings.
Che Khalib reiterated that he had no idea on whether the government will announce a revised power rate after the last adjustment of an average reduction of 3.7 per cent on March 1 this year.
Nevertheless, he said TNB will seek to review its tariffs “up or down” if the prices of gas and coal move likewise.
On a quarterly basis, TNB’s saw its net profit in the third quarter easing to RM419.9 million from RM771.6 million in the preceding quarter.
This excluded a forex gain of RM603.2 million. In the nine months, it made a forex loss of RM933.5 million.
Che Khalib said a forex loss can be expected in the fourth quarter as the ringgit has been weakening vis-a-vis the yen and US dollar since May.
Leo Moggie said TNB is able to secure lower coal prices in the third quarter at about US$80 (US$1 = RM3.55) per tonne. But it still had to pay a higher contracted coal price for the nine months at an average of US$94.3 a tonne.
This was higher than what the group is allowed to pass through under the fuel-cost adjustment of US$85 a tonne, he added.
TNB paid US$113.9 a tonne in the first quarter and US$85.8 a tonne in the second quarter. For the financial year 2008, the contracted coal had cost the group an average US$71.2 a tonne.
“We don’t think we can lock in the average contracted coal price at US$85 per tonne for the full-year 2009,” Che Khalib said.