KUALA LUMPUR: By history and tradition, Tenaga Nasional Bhd
(TNB) is dear to the hearts of many Malaysians because for nearly 70 years of ‘powering the nation’, it has somewhat imbued their lives with some awesome influence and power.
TNB helps to brighten up homes and workplaces, powers factories and industries, transmits progress, and distributes opportunities and wealth.
In a nutshell, for nearly seven decades TNB has been powering the rakyat and transforming the nation.
While many may have taken TNB for granted, it has been steadily doing its national duty besides sharing part of its success and profits with the rakyat through various corporate social responsibilities and dividends.
TNB has been giving back to the country through its generous support for communities, investments in education like providing scholarships and financial assistance to students, among others.
Its high dividend pay-out had reached not only institutional investors and the rich but also ordinary people who have contributed some of their hard earned incomes to the Employees’ Provident Fund (EPF) or Tabung Haji depositors, who are mostly rural folks.
Tracing back TNB’s dividend for the 16 months ended Dec 31, 2017, the company has disbursed RM4.7 billion to shareholders, which stands out as among the highest dividend payments by one of Malaysia’s top-ranked listed companies.
Besides benefiting direct shareholders, this enormous dividend pay-out also created multiplier effects to institutional investors such as the EPF, Permodalan Nasional Bhd (PNB), Kumpulan Wang Persaraan (KWAP), Lembaga Tabung Haji (LTH) and other unit trust companies that passed on the high returns to their account holders.
TNB’s high dividend payment pay-out had enabled EPF or the country’s employees retirement fund to benefit its almost 14 million account holders while it also helped PNB, the nation’s largest unit trust fund manager, to provide handsome returns to its estimated 13.2 million accounts.
KWAP, with an estimated 660,000 pensioners on its list and Tabung Haji, with more than nine million depositors, also profited from TNB’s dividend policy.
In the final analysis, the rakyat or people had gained much from this largesse from TNB.
Its ability to allocate such a huge dividend pay-out was not solely based on its position as Malaysia’s leading electricity provider for almost 70 years, but also through the toil of its diligent workforce and foresight of its management to sustain TNB’s strong growth, operationally and financially.
The past few years have seen the national utility corporation reinventing itself to remain on a growth trajectory in the regulated business of electricity transmission and distribution, which had contributed to a stable and recurring income stream under the Incentive Based Regulation (IBR).
Over the longer-term, TNB will not be wholly dependent on its regulated business for survival but must anchor itself to new sources of growth, both in terms of products and markets.
Analysts from a number of research houses have maintained a positive outlook for TNB despite its migration to new spheres of businesses.
“Through our non-regulated business, we continue to explore avenues to unlock greater value, which can sustain the company in the years to come,” TNB president/chief executive officer had informed its shareholders in one of the company’s previous annual reports.
Locally, TNB is now operating in a tougher environment, amidst moderating electricity sales growth, as the country’s electricity consumption, which used to be 1.1 per cent of gross domestic product (GDP), has been declining since Malaysia gradually moved out from being a wholly industrial nation.
Under IBR, the government’s programme to reform and liberalise the power industry, investment returns on TNB’s two core businesses in distribution and transmission have been regulated and on a declining scale.
TNB is allowed to earn 7.3 per cent from its regulated assets from 2018 to 2020, down from the 7.5 per cent allowable in the 2015-2017 time frame.
For the record, the implementation of IBR has been practiced globally to incentivise power utility companies to improve their efficiency, create stability in the electricity supply industry, increase transparency and offer competitively-priced tariffs.
Despite a lower allowable return on its assets and potentially experiencing slower sales growth, TNB remains committed in “powering the nation”, by allocating RM18.8 billion in capital expenditure for its transmission and distribution grid for 2018 to 2020 against RM15.08 billion for 2015 to 2017.
The two time-frames in IBR’s implementation is also to allow TNB to cope with various industry challenges.
In view of the changing energy landscape and new consumer trends, TNB commenced a 10-year strategic plan in 2016 known as “Reimagining TNB” to transform it into one of the top ten global utilities by 2025.
TNB’s plan hinges on making a group-wide transformation to maintain TNB’s leadership in the home market, as well as, expand its global presence.
For that to happen, TNB has acquired equity stakes in power-related entities in India, Turkey and the United Kingdom, embarked on businesses that will position it as ASEAN’s leader in renewable energy and through offering products and services that meet customers’ expectations in terms of clean power generation, smart home technology and energy efficiency.
All said, its forward-thinking strategic plan, ability to cope with the tough demands of the IBR-regime and high dividend pay-out reflect well on TNB’s sturdiness and drive as a dynamic power utility as in “the proof of the pudding is in the eating”. - Bernama