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PETALING JAYA: Tenaga Nasional Bhd (TNB) shares slipped to their lowest in three months yesterday, fuelled by talk that there would be no increase in tariffs this month.
“It was that as well as a little bit of the gradual increase of natural gas and coal prices due to the cold weather factor,” said Chris Eng, head of research at OSK Investment Bank.
Natural gas and coal are the main sources for TNB’s power generation.
Shares in the national power producer shed up to 3.2% in early trade yesterday but closed 1.8% down at RM8.20.
It is understood that the subject of an increase in tariffs was not brought up at the Cabinet’s most recent meeting as widely anticipated.
A Bloomberg report yesterday quoted Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui as saying that the Government had not decided whether to raise power prices.
“Investors could have been disappointed that it (a decision on a hike) is taking longer than expected and sold off,” Eng said. “But we’re still hopeful for a hike soon.”
The market has been anticipating an increase in electricity prices this month following TNB’s higher independent power producer capacity payments to its newly-commissioned Jimah plant in Port Dickson.
The expectations of a tariff hike are also premised on the Government’s move to reduce subsidies to keep its budget deficit in check.
A tariff hike may help the Government reduce subsidy expenses but it can also lead to inflationary concerns.
TNB is now paying a subsidised gas price of RM10.70 per million British thermal units (mmbtu), which is lower than the market price of about RM12 per mmbtu.
It is learnt that TNB would only adjust the electricity tariffs based on the gas price factor, and not add on any other variables.
Electricity tariffs in Peninsular Malaysia were last adjusted on March 1 last year, reduced by an average of 3.7% following the 24% hike in July 2008.
The 3.7% tariff reduction was accompanied by a 25.2% reduction in gas prices from RM14.31 per mmbtu effective July 2008 to RM10.70 per mmbtu effective March last year.
A fund manager said yesterday’s sellers included some foreign funds. A total of 17 million shares changed hands, at least double the volume traded a day earlier.
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