Dari The Star Online Wednesday March 26, 2008:
TNB will buy more coal this year
KUALA LUMPUR: Tenaga Nasional Bhd (TNB) said it agreed to buy more than its coal requirements for this fiscal year.
It had secured 111% of coal needs for the year ending August (FY08), chief financial officer Datuk Izzaddin Idris said at Investor Malaysia 2008.
According to Bloomberg, TNB hasn’t locked in coal purchases for 2009 and 2010. Rising coal prices have raised concern that TNB’s profit may be eroded by higher fuel costs.
The outlook for FY09 would be “very, very challenging,” Izzadin said, adding that he expected prices to extend gains. TNB was looking for new sources for coal, he said.
The current electricity tariff will be maintained because fuel and gas prices remain unchanged, Bernama reported, citing Energy, Water and Communications Minister Datuk Shaziman Abu Mansor.
Meanwhile, AmResearch believes TNB will be submitting a proposal for a base tariff review and a pass-through formula to the Government.
This is based on TNB’s presentation by chief financial officer Datuk Izzaddin Idris, and private meetings between chief executive officer Datuk Seri Che Khalib Omar and 14 foreign fund managers at Invest Malaysia 2008 yesterday.
While no timeline was given, AmRearch said in its latest note that TNB management expects a decision in 12 months. The management also does not rule out a fuel cost subsidy from the Government if coal prices continue to escalate. Independent power producers and fuel costs account for 59% of total operating costs.
TNB’s gearing remained at a healthy 41%. However, AmResearch said the group intends to trim its foreign loans exposure to 25% of total borrowings from the current 47%.
“Given the weaker US dollar, the management is seriously looking at redeeming its US-dollar bonds,” the brokerage said.
Despite the higher sales outlook, AmResearch said the management highlighted the group’s rising operating costs in light of the steep rise in market coal prices recently.
On dividend policy, although the TNB board intended to maintain its 40% to 60% free cash flow dividend distribution policy, the management may decide to review in light of the rising costs of operation, going forward, it said.
After the group’s estimated annual capital expenditure of RM4bil to RM4.5bil, dividend budget was likely to be lower when compared with last year, it said.
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Kita tengok siapa kena!!!!
