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Malaysian Power business gearing up for a big year

The Malaysian power sector is bracing for another exciting year in 2013, buoyed by higher energy demand from growing industries and businesses.

A steady gross domestic product (GDP) growth expected in 2013 will mean more electricity to power up factories, offices, shops and houses, analysts said.

The demand for power in Malaysia has been growing hand in hand with the GDP for the past decades, they noted.

Energy demand is expected to reach 20,700 megawatt (MW) by 2020 from 15,826MW in 2012, spurred by the New Economic Model, Economic Transformation Programme and the country’s strong GDP growth.

The country’s electricity demand is projected to grow between 3.5 per cent and 4.6 annually.

The country’s biggest utility provider Tenaga Nasional Bhd (TNB) plans to invest RM9.7 billion over the next five years to build new power capacity.

At its annual shareholders meeting this month, TNB president and chief executive officer Datuk Azman Bin Mohd said the energy sector’s outlook next year is expected to be good with strong demand, steady coal prices at around US$100 (RM300) a tonne and opening up of new housing areas and industrial parks.

Accordingly, TNB, which is one of Asia’s three largest power producers, can expect many good things in the next few years.

The year 2015, particularly, will mark the end of some of TNB’s lopsided power purchase agreements (PPAs) with some 14 independent power producers.

It will also get a steady gas supply with the commencement of Petroliam Nasional Bhd’s regassification plant in Sungai Udang, Malacca.

From a regulator’s point of view, the Energy Commission is expecting positive developments with increased transparency in the competitive bidding for new plants and extension of the two first-generation PPAs at lower rates.

Earlier this month, the watchdog agency announced a tender for two new coal-fired plants in Peninsular Malaysia with a combined capacity of 3,000MW.

They are due to be operational by October 2017 and 2018, respectively, to add sparkle to already robust machineries oiling up industries.

The public, meanwhile, may soon know what exactly they are paying for in their electricity bills now that efforts are underway to “unbundle” the accounts.

It is understood that the commission, together with MyPower Corp, TNB and the Economic Planning Unit, are taking a look at TNB’s cost structure to see how it can segregate the cost.

The cost components in the electricity business are generation, transmission and distribution.

Many are unaware that currently they are paying a lump sum for all the power components, which more or less cover the entire spectrum of TNB’s power business.

Now that the accounts will be unbundled, it will be fair to all. This means the gobblers of power, such as the steel companies, will have to pay much more for the energy that they consume compared to what they pay at present.

Homeowners, meanwhile, do not have to pay for the power component that they do not use, such as power distibution that spans hundreds of kilometres.

This would ensure future electricity generation at competitive rates, position the power sector towards a cost-based structure and enhance the sustainability of the national power supply in the long run.

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