Business

Wednesday June 27, 2012

TNB, Govt to discuss ‘extra RM1.6bil gas bill’

By YAP LENG KUEN
lengkuen@thestar.com.my


KUALA LUMPUR: Tenaga Nasional Bhd (TNB), which is getting imported gas in two months' time, is talking to the Government on an extra RM1.6bil that will be charged under the market pricing portion of the deal.

“By September, we will have supply of gas,'' TNB CEO Datuk Seri Che Khalib Mohd Noh told StarBiz. “The issue of insufficient volume of gas will be a thing of the past.''

The regassification plant in Malacca, which will allow for the import of liquefied natural gas (LNG), is slated for completion in August.

“They told us that post September, they can deliver the volume we want, except that any amount above 1,100 million standard cu ft per day (mmscfd) will be at market price,'' he said.

Che Khalib: ‘By September, we will have supply of gas.’

Currently, TNB gets supply of 1,100 mmcsfd of gas; this will be supplied at the government-regulated price of RM13.70 per million metric British thermal units (mmbtu).

Meanwhile, the market price per mmbtu is RM45.

“This is a fair deal,'' said Che Khalib. “Burning gas at market price is better than burning distillates for fuel.''

But the differential in price will be something for the Government to work out.

TNB consumes between 1,200 mmscfd and 1,250 mmscfd of gas the price difference will come up to RM1.6bil.

“We are negotiating with the Government on this,'' he said. “TNB is not in a financial position to pay and the Government will have to find a solution.

“We are not sure if the Government will continue with the fuel-sharing mechanism or share the costs with the consumers.''

Under the fuel-sharing mechanism, three parties TNB, Petroliam Nasional Bhd and the Government had shared the costs of burning more expensive distillates due to shortage of gas supply.

“We have alerted the Economic Planning Unit and the Performance Management & Delivery Unit on how to overcome the extra cost,'' he said.

If TNB runs all its gas plants, it would require 1,700 mmscfd of gas. At 80% capacity, it would need 1,350 mmscfd. This represents an extra 250 mmscfd (above the government-controlled portion of 1,100 mmscfd) which would be at market price.

“Shortage of gas has always been an issue,'' said Che Khalib.

“The question I have been raising over the last two years is what are we doing to overcome the problem. Because of all these noises that TNB has been making, the Government realised that the gas-supply issue had to be addressed quickly and fast tracked the LNG terminal project in Malacca for that.''

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