Power Tariff Stays; SESB Up for Sale
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KOTA KINABALU: Electricity tariff in Sabah will remain unchanged for the time being as the national power company Tenaga Nasional Berhad (TNB) looks to sell its Sabah assets.
Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said yesterday that the tariff is fixed until June 2018 when the Incentive-based Regulation (IBR) kicks in Sabah that may or may not affect tariff.
Meanwhile, loss-making SESB of which more than 85% share is owned by listed TNB is up for sale, including back to its original owner â€“ the Sabah government â€“ with a hefty price tag of RM8 billion.
Maximus Ongkili said consumers will also enjoy electricity tariff rebates of RM0.12 per kilowatt hour (kWh).
The government has budgeted fuel and tariff support subsidies worth RM1.631 billion for consumers in Sabah and Labuan for the period of March 2015 to June 2018.
The tariff in Peninsular Malaysia will remain unchanged until December 31, 2020. The rate has been fixed since Jan 1, 2014.
He said the matter was decided by the Federal Cabinet following a meeting last December 13 where it was also agreed that the government will bear electricity tariff rebates of RM0.18 cent per kWh for the period of January 1 to June 30, 2018 for users in the Peninsula.
"The rebates amount to RM929.37 million, and the total rebates borne by the government from March 2015 to June 2018 is around RM6.3 billion" he told a press conference here yesterday.
When asked why the electricity tariff for Sabah and Labuan users would remain unchanged until June 2018 only, and not December 31, 2020 as in the Peninsula, Ongkili explained that the tariff in the Peninsula is determined by the Incentive Based Regulation (IBR) system which will only be implemented in Sabah and Labuan in the second half of next year.
IBR determines the input cost based on a three-year forecast, according to the international standard, to ensure the cost is reflective of the tariff and at the same time is fair to the operators.
"Without the IBR, the cost of power generation and delivery can only be fixed for six months. So when implemented, Sabah Electricity Sdn Bhd (SESB) can have a proper return" he added.
Meanwhile, commenting on the future of SESB which Ongkili recently described as being â€˜on the verge of insolvency', he said that his ministry is in advanced discussion with the Finance Ministry and SESB's major shareholder, TNB.
Although no decision has been made yet, he said that TNB is planning to dispose of its shareholdings in SESB.
"SESB is insolvent and not bankrupt because it has a lot of assets" Ongkili stressed. "Now the company is worth RM8 billion. It just does not have cash to cover its immediate expenses.
"So now, we want to make sure SESB must continue to function (after being sold by TNB), and there are many challenges it has to face.
"The tariff (in Sabah) has not been reviewed for 22 years, so the cost of supply is higher. Transmission and distribution of power is also very costly as it has to go over the mountains and the rural areas.
"All those cost a lot but there are fewer consumers, therefore the revenue they get from the rural areas cannot pay for the maintenance of the transmission lines.â€
On the possibility of the state government taking over SESB, he said that it is up to the state if it is willing to pay RM8 billion.
He said that studies are being carried out on the matter including the possibility of using the Bakun model where Sarawak state government purchased the Bakun Dam from the Finance Ministry.
"Our sentiment is for SESB to come back to the state but we need to look at the cost including its borrowing" he said.
When asked on the proposed gas pipe line from the west coast to the east coast, Onglili said that it is the advanced planning stage under the Finance Ministry.
He said that the Finance Ministry and Petronas are finalising the packages including identifying land for acquisition. According to him, the authorities are looking into the possibility of laying the pipe from Kimanis to Kota Belud under the sea, continuing underground to Sandakan.