KUALA LUMPUR: Tenaga Nasional Bhd expects the impact of movement restrictions on electricity demand to be less severe this year.
TNB president and chief executive officer Datuk Seri Amir Hamzah Azizan said as industrial and commercial sectors were allowed to operate during the conditional and recovery Movement Control Order, contraction in electricity demand continued to narrow in the last three months of 2020.
The contraction narrowed to only 1.1 per cent for the quarter compared with -12.9 per cent during the MCO period in the second quarter of 2020, he said in a statement today.
TNB saw its net profit slip 20.6 per cent to RM3.59 billion in the year ended December 31, 2020 (FY20) from RM4.53 billion a year ago.
But in the fourth quarter, its net profit increased 85.5 per cent to RM1.21 billion from RM653.3 million a year earlier, thanks to higher tax credit resulting from the claim of reinvestment allowance incentive.
The group said its revenue for the quarter had fallen 15 per cent to RM10.32 billion from RM12.18 billion due to lower sales of electricity.
Group revenue dropped 13.7 per cent to RM43.97 billion from RM50.93 billion in 2019 due to lower sales of electricity of RM6.7 billion, down 13.4 per cent, from RM49.91billion last year.
"The decline was largely contributed by customers of commercial and industrial segments, which were affected by the Covid-19 outbreak," it said.
TNB declared a final single tier dividend of 18 sen per share and a special single tier dividend of 40 sen per share for the financial year ended December 31, totalling RM3.31 billion.
Amir Hamzah said in terms of collection, TNB had continued to observe further improvement in the final quarter 2020 with better collection efficiency rate of 97 per cent in December compared with 87 per cent in April 2020.
"This is a good sign of gradual recovery as economic activities restart," he added.
Amir said under the Regulatory Period 2 (RP2) extension, TNB's electricity demand was forecast to grow 2.9 per cent to 113,909 GWh.
"Nevertheless, earnings of our regulated revenue cap entities are guaranteed at demand growth as stipulated by the Incentive-Based Regulation (IBR) guidelines," he said.
In December 2020, TNB received approval from the Energy Commission to extend the RP2 by a year, until December 31, 2021.
The extension indicates the effectiveness of the IBR mechanism to maintain stability in the power industry.
The IBR is a mechanism for electricity tariff setting with incentives to improve TNB's efficiency and provide greater transparency to customers.
"Under the RP2 extension, the base tariff remained at 39.45 sen per kiloWatt-hour (kwh) and the weighted average cost of capital (WACC) at 7.3 per cent, ensuring stable returns for TNB's regulated business entities.
"Capital and operating expenditure were allowed higher at RM7.3 billion and RM6.3 billion respectively as against RM6.6 billion and RM6.1 billion average per annum under RP2. Higher provision of doubtful debt was also approved at RM200 million for FY21 compared with RM94.3 million in FY20," said Amir.
He said TNB had submitted its RP3 proposal to the EC today.
RP3 will start from January 1, 2022 to December 31, 2024.