Tenaga Nasional Bhd (TNB), the national power producer of Malaysia, would embark on nuclear power in the next few years. Given the sensitivity of such issue, Malaysia government has again hinted that there are plans to construct nuclear power plants in the country to fulfill boost up the electricity capacity.
|Example of Nuclear Power Plant|
According to theStar recently, Energy, Green Technology and Water Minister Datuk Seri Peter Chin said Malaysia plans to build two nuclear power plants with a capacity of 1,000 megawatts (MW) each and commencement of operations in 2021-2022. This is part of the country's overall long-term plan to balance its electricity generation mix.
The two nuclear plants would represent 9% of peninsular Malaysia's existing power generation capacity of 21,817 MW. This is necessary for the country given that the peninsula's power reserve margin will drop from 44% currently to below 20% by 2016 while the 1,600MW Bakun undersea cable project has been discontinued.
While nuclear power is a long-term catalyst, there is short and medium-term positive news for Tenaga.
Generally, weakening of USD would improve the balance sheet of Tenaga as most of its debt are denominated in USD. With USD falling from 3.14 to 3.09 for the past two weeks against RM, Tenaga stands to gain from lower financing cost/interest incurred.
With the escalating coal prices which put pressure on the bottom line of Tenaga, government has agreed to grant Tenaga to hike electricity tariff very soon. Speculations are rife up saying the hike could materialized as early as 1st January 2011, and the percentage was up to 40%.
Although Finance Malaysia expecting a tariff hike in second quarter next year, it should not be more than 20%. This is a very cost-sensitive issue given the upcoming general election said to be after Chinese New Year.