Tariff surcharge will reverse TNB's losses, says Maybank IB

Updated 7 years ago · Published on 2 Jul 2018 1:02PM · 2 Comments

THE imposition of a tariff surcharge in the second half of this year has removed a major overhang over the integrity of the pass-through mechanism and will likely cause some reversal in Tenaga Nasional Berhad’s (TNB) recent losses.

Maybank Investment Bank (IB) Research said it was wary that the market had not yet digested a likely earnings step-down in the Second Regulatory Period (RP2).

“We maintain a ‘hold’ on TNB with an unchanged target price of RM16,” it said in a note.

The regulator has announced that the present 1.52sen/kWh tariff rebate in Peninsular Malaysia would be discontinued, and a 1.35sen/kWh tariff surcharge (amounting to RM698 million) to be imposed for the second half of this year.

Maybank IB said this is the first time since the implementation of incentive based regulation in 2014 that consumers would have to bear a tariff surcharge, thus alleviating recent concerns over the integrity of the pass-through mechanism.

“Longer-term, we do not rule out Tenaga’s valuation multiple possibly expanding, as doubts over the pass-through mechanism fully dissipates,” it added. – Bernama, July 2, 2018.

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Comments

  • Wouldn't re-negotiating unfair contracts with IPPs yield far more dramatic savings? This is still unfair burden on the consumers. We have been taxed by the unfair contracts for years, enriching the fee. Please PH, look into this immediately.

    Posted 7 years ago by Karen Siebel · Reply

  • Kasi turunlah bukan naik.

    Posted 7 years ago by Raj Manik · Reply