FOMCA in the News | The Star Online - Cabinet to discuss power tariff today |
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| Written by admin |
| Thursday, 25 February 2010 01:39 |
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PETALING JAYA: The proposal for a power rate hike will be discussed at the Cabinet meeting today and, if approved, the new electricity tariff structure is expected to take effect next month. Energy, Green Technology and Water Minister Datuk Seri Peter Chin said his ministry had already submitted the proposal for a review of the current power rates to the Economic Planning Unit in the Prime Minister’s Department. While the ministry remained tight-lipped on the amount of increase, it is understood that Tenaga Nasional Bhd (TNB) is seeking a hike of between 5% and 10% in electricity tariff in the current review. TNB shares had come under some selling pressure due to the delay in the review of the electricity tariff, which was widely expected in January. This was evident in the trend of its share price, which had been languishing, despite the company reporting impressive first-quarter earnings in January. TNB made a net profit of RM706.3mil, or 16.28 sen per share, for the first quarter ended Nov 30, 2009, against a net loss of RM944.1mil, or 21.78 sen per share, in the previous corresponding period. Year-to-date, TNB has shed 5.36%, closing at RM7.95 per share yesterday. It is understood that TNB had proposed a 4% to 5% hike in the electricity tariff when the rate was due for review in July last year. But the proposal for a power rate adjustment then was shot down by the Cabinet. Analysts have been reiterating that the market would view any upward tariff adjustments as the main catalyst for TNB going forward. The electricity tariff was last adjusted in March 2009, when the Government allowed TNB to reduce the rate by an average 3.7%. That was in response to the reduction in the subsidised price of natural gas as supplied to the power sector by Petronas from RM14.31 to RM10.70 per mmbtu (million British thermal units). The price of natural gas was then on the decline, following the fall in global crude oil prices from a record high of US$147 a barrel in July 2008 to less than US$45 per barrel at the end of February 2009. The price of natural gas has since rebounded following the recovery in global crude oil prices. Based on the current oil price trend, gas prices are said to be trading around RM38 per mmbtu. |
| Last Updated on Thursday, 25 February 2010 01:45 |