Faced with a dire gas shortfall, TENAGA NASIONAL BHD [] (TNB), has to spend an additional estimated RM3 billion on power generation for this year, while having to raise financing for operations as the only solution to sustain itself.
President/Chief Executive Officer Datuk Seri Che Khalib Mohamad Noh said if no immediate solution was found to address the gas crisis, it would be the first time then, that the company was going to the market to raise money for operations.
Previously, all fund raising was for capital expenditure, he said at TNB's Hari Raya open house, here on Tuesday, Sept 13.
The gas curtailment exercise by Petronas has prompted TNB to buy fuel distillates which cost five times more than gas, to keep generating electricity.
"Power plants in the country were not made to burn distillates. To generate 1,000 MGW using the alternate fuel, it costs us about an extra RM10 million daily.
"It's time for the country to review the gas allocation policy," Che Khalib said.
He also said the gas shortage was more apparent this year.
"For the whole of 2011, the extra cost for power generation, will be about RM2.6 billion at the minimum. At the moment, we are using internal reserves which is draining out fast.
"Our debt level which stood at RM32 billion in 2001 is down to RM18 billion, and this gives us room to borrow but we can't sustain ourselves for long. We need a permanent solution," he added.
TNB has also lobbied for the additional fuel costs to be shared with two other industry players, Petronas and independent power producers.
Last month, the utility giant submitted a proposal for cost sharing as an immediate solution to the government but there has been no decision yet.
On average, TNB is getting about 900 million standard cu ft of gas per day (mmscfd), from the usual rate of 1,250 mmscfd for this year. The power sector is entitled to about 1,350 mmscfd for next year.
On the company's fourth quarter result ended Aug 31, 2011, Che Khalib said it would be bad and his target for the financial year ended Aug 31, 2011 has gone very much haywire.
He said it has been more than 50 per cent revised downward.
He hoped there would be sufficient gas supply by July next year when Petronas' re-gasification terminal for Liquefied Natural Gas in Malacca is
ready.
"We are not looking at passing down the additional cost to the consumers," Che Khalib said. -- BERNAMA
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