No change in power tariff until June 30, 2015

KUALA LUMPUR: Tenaga Nasional Bhd (TNB), which is conducting a due diligence on buying a 25% stake in 1Malaysia Development Bhd's (1MDB) Jimah East coal fire power plant, reiterated that that there will be no increase in electricity tariff until June 30 next year.
TNB CFO Fazlur Rahman Zainuddin said in view of the current lower crude oil and coal prices prices, as well as a more volatile ringgit movement, it is unclear whether this would lower tariff and it will have to wait and see.
"Crude prices coming down have indirectly sometimes an impact on other commodities as well and at this point it is difficult to say what will be the impact. Nevertheless, the situation is under the ICPT (imbalance cost pass through) and it is neutral to TNB," he told a press conference after TNB's AGM and EGM here yesterday.
"The government has announced that there is no tariff adjustment until June 30, 2015. What are the prices beyond that, we don't know," added Fazlur.
TNB president and CEO Datuk Seri Azman Mohd also said whether this would translate to cheaper tariff remains to be seen.
"We just had a review (ICPT) and there was no tariff increase. But that doesn't mean there is no ICPT. There is (ICPT) but it has not warrant an increase because there is enough money from the PPA (power purchase agreements) renegotiation, compensated with the increase in LNG (liquefied natural gas) and lower coal. But for the next review we don't know yet, we need to look at the figures," Azman said.
The ICPT mechanism was implemented in January 2014 and allows for a review of the tariff rate every six months, based on changes in fuel and generations costs.
Fazlur said the cost that it incurs from July to December 2014 will be recovered in the next ICPT review, which is during the January to June 2015 period.
Meanwhile, Azman said 1MDB offered TNB to take up a stake in Jimah East several months after it was awarded the job.
"We have to do a due diligence on this project and we're yet to give a decision," he said.
On 1MDB requesting for a six-month extension to complete the plant, which is scheduled to be completed by the end of 2018 (first unit) and mid-2019 (second unit), Azman said the delay is under the purview of the Energy Commission (EC).
"We're just an offtaker. EC has to make sure that whatever that has been planned come to fruition. If any projects are delayed, there must be some alternative that the EC has to decide or guide us. It could mean an extension of existing power plant or another new plant… but it's up to EC to decide on this,"he added.