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Tenaga Nasional Bhd(TNB) Should Concentrate On Reducing Foreign Exchange(Forex) Losses Of RM 571 Million That Reduced Profits Instead Of Taking The Easy Way Out By Increasing Electricity Tariffs Press Statement by Lim Guan Eng (Petaling Jaya, Friday): DAP expresses concern of reports in the Berita Harian quoting TNB Chief Executive Officer Datuk Che Khalib Mohd Noh as saying TNB intends to seek an increase of electricity tariffs. Even though Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik said today there are no plans to increase electricity tariffs, yet he added that the tariffs would be readjusted to deter any wastage of electricity by consumers. Such a readjustment is actually a concealed increase in electricity tariffs that would burden consumers if the level set for wastage is fixed too low.  It is ridiculous for Lim Keng Yaik to warn TNB not to talk of such tariff increase but only to the Ministry. This goes against the principle of transparency and gives the unfortunate impression that the government has something to hide and has not completely rejected the proposed tariff increase.   DAP states that there is no justification for TNB to talk about increasing electricity tariffs just because it recorded a drop in profits of RM 814 million for the year ending 31 August 2004 from the previous year’s RM1.06 billion. TNB should look at other causes at the drop in profits such as the need to reduce costs and losses.   One of the main contributory causes of the 23% drop in profits was the forex translation and transaction losses of RM 571 million as compared to only RM 17 million the previous year. If TNB can take the necessary financial measures to reduce such forex losses, TNB’s profitability would improve.  TNB can not rely on the excuse of higher oil and gas prices to increase electricity tariffs. Just because oil price has reached US$ 53 per barrel, does not give TNB the excuse to increase tariffs. Malaysians do remember that when oil prices plunged to less than US$16 per barrel, TNB did not offer to reduce electricity tariffs.   The government should not allow TNB to increase tariffs just because oil prices are high when TNB did not seek to reduce tariffs when oil prices were low. Furthermore, TNB has failed to explain why despite its profits, it has given such a low rate of return to the government of only RM 7.2 million. According to the Ministry of Finance Report Of Estimates of Government's Revenue 2005, TNB  was estimated to contribute RM 7.2 despite Tenaga having the third largest capitalisation in the KLSE at RM 31.5 billion as at 30.8.2004.  The management of TNB is also problematic and lacks confidence from foreign investors. On 11 September 2004, it was reported in the Malay Mail that CLSA Ltd, the Asian Investment banking arm of France's Credit Agricole SA, recommended investors buy shares in Tenaga Nasional Bhd and Telekom Malaysia Bhd saying "these organisation have been so badly run that any change will go to the bottom line." In other words, Tenaga and Telekom have been so badly run any changes can only contribute towards adding to TNB and Telekom’s profits.  The time has come for TNB to concentrate on its own weaknesses such as reducing  forex losses amounting to RM 571 million instead of taking the easy way out by seeking an increase in electricity tariffs. Such an increase will not only burden the people but also affect business and the economic climate. Economic sentiment is already adversely affected by the rise in fuel prices and the hard to justify increase in electricity tariffs may set off a chain reaction of higher inflation. (29/10/2004) * Lim Guan Eng, DAP Secretary-General