By P. Gunasegaram
It is not often that Tiger defends a corporation but he believes in this event he must. An aspiring prime ministerial candidate such as Khairy Jamaluddin should really not nudge the truth out of focus and help incur undeserved wrath upon Tenaga Nasional Bhd. Let Tiger dig in and unravel the truth.
Ah, what people will do just to gain some political capital. Out in the real jungle, we Tigers don’t play games but in the corporate and political jungle, it’s a different matter altogether. You climb up by putting someone else down, at the expense of the uncommon commodity called truth.
Take Umno Youth chief Khairy Jamaluddin’s recent flaying of Tenaga Nasional Bhd (TNB) for the increase in electricity tariffs by about 15%, barring those 70% of households who were exempted because their consumption was low.
Khairy Jamaluddin
“I am bound by the cabinet decision but, as (Umno) Youth chief, I felt the need to raise it (displeasure over the tariff hike). I also raised it in cabinet. We understand the part about rising cost of fuels but TNB’s profits are high,’ he said.
He noted that TNB needed to do this to recover high costs of investments “but for me and the rakyat, this is not good enough.”
Predictably the report garnered wide press and would have helped to make Khairy, a youth and sports minister who aspires to become prime minister one day, gain a lot of publicity and paint him out to be a voice which champions the people. It is a populist move.
But a person of Khairy’s background and education – he is a graduate from Oxford University’s highly regarded politics, philosophy and economics programme and the son of a roving diplomat – really ought to know better than to blame TNB.
The tariff hike was decided by the government – not TNB – the very government he represents as cabinet minister. Obviously other ministers thought TNB had been getting a bad rap all this while – and indeed it has.
When TNB was first listed in the early nineties, the government promised a cost-pass-through formula whereby the fuel cost increases would be passed on to consumers of electricity, which is the fair thing to do. Nobody likes power tariffs to increase but the provider should not bear the cost of electricity increases.
In fact the independent power producers or IPPs which came on the scene with very favourable terms had an iron-clad formula to pass fuel costs on to TNB, the power purchaser. It would have been unfair if TNB could not pass on these costs to consumers. But sadly, for decades that was the situation that prevailed.
TNB was then majority owned by the government and subsequently by government organisations such as Khazanah Nasional and funds such as the Employees Provident Fund or EPF and arms of the national unit trust schemes under Permodalan Nasional Bhd or PNB.
But it suffered the ignominy of being treated as a stepchild by the very government which owned a lot of it when that same government allowed the IPPs to pass all their cost increases to the government.
When gas came to be the major input for both TNB and IPPs in power production, the government roped in the national oil corporation Petronas to provide gas at below market prices to subsidise power tariffs. This benefited most industries and commercial users who were the major users of power.
Now, finally, the government has come to its senses, albeit quite late in the day, and the consumers are bearing the cost of fuel increases. True, the government needs to control its costs in other areas, but that is another story and a separate issue. It still has to rationalise subsidies, and fuel is the item that is most heavily subsidised – some RM42 billion a year.
Instead of supporting the government that he is part of in these correct moves, Khairy has chosen instead to play to the gallery. With his background he surely understands the economic reasons and his moves to demonise TNB reflects his willingness to play politics even at the expense of the country.
TNB suffered because it was not allowed to pass on fuel cost increases and its profits for years was artificially depressed because the government disallowed justifiable tariff increases. Its share price suffered badly. Apart from TNB, Petronas suffered along but it was wholly government owned which TNB was not.
If the government did not want tariffs to increase, it should have directly paid TNB the amount that it had lost. This is what it did with toll road operators – when tolls were not increased, the toll operators were compensated directly.
If the government had done that, then TNB would not have have been subject to fuel price vagaries and the government-linked company would have performed well, along with its share.
Finally, with the tariff increase and another promise of a cost-pass-through formula in place, TNB has already gained some RM7 billion in value to about RM60 billion from a market re-rating, benefiting the government, EPF and PNB directly.
Khairy should do well to remember that and as well that the EPF holds funds of all working Malaysians while PNB is a key instrument in increasing Malay and bumiputera involvement in business.
Tiger can only lament the lack of moral scruples among politicians and is disappointed that Khairy – smart, affable and savvy as he is – shows that he is taking the well-worn Umno path to fame and fortune.
Just another politician. GRRR!
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