KUALA LUMPUR: The government’s decision to exclude some profitable segments of the economy from electricity subsidies will not have any material impact on Tenaga Nasional Bhd (TNB).
This is because the subsidies bill is being paid and borne by the government while power tariffs are regulated by the Energy Commission.
TNB’s share price saw a small decline at its close yesterday due to profit-taking activities, declining by 13 sen to RM9.21.
It is possible the move by the government may be viewed positively instead for TNB as concerns begin to ease on its receivables risk, according to analysts.
“The government is passing on some of the higher burden of subsidies to multinational companies and giant profitable firms.
“This will lower the potential high subsidies commitment, which had affected investors’ sentiment on potential receivables risk to TNB,” Hong Leong Investment Bank (HLIB) Research said in its report.
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It noted also that the subsidy restructuring would ensure the long-term sustainability of the sector.
TNB had said the government had fully paid the RM5.8bil subsidies in the second half of 2022 and this proved its commitment towards the imbalance cost pass-through mechanism framework.
“We believe the new government is implementing a balanced approach to protect the end user group while supporting economic recovery,” the research house said, while maintaining a “buy” call and RM11.65 target price on TNB.
Socio-Economic Research Centre executive director Lee Heng Guie said the decision not to raise electricity tariffs for some households and the small and medium enterprises (SMEs) would help support the consumers and businesses.“The complete details are still not out. For households it appears to be generalised – is it all households or would it be targeted? For the large companies, if there is a rise for them, bear in mind they also have their costs. It seems price pressures will still be present as we move into 2023,” Lee told StarBiz.
The Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai expressed gratitude to the government and said the decision would bring a huge relief to many SMEs which are facing tremendous pressures.
“These are to contain increasingly challenging high operating cost, given the high global inflationary pressures, weakening of the ringgit and the geopolitical tensions resulting in the rise in raw material prices, energy costs, transportation costs, global supply chain disruptions as well as labour,” Soh said.
“FMM also hopes that there would be additional initiatives in the form of structured schemes that include advisory and technical support for SMEs in the transition towards energy-efficient and climate friendly operations,” Soh added.,
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