Fri, 17/08/2018 - 05:00
Current Issue 41
Tenaga Nasional Berhad aims to be among the leading corporations in energy and related businesses on a global platform
Writer: Phoebe Calver
Project Manager: Matt Cole-Wilkin
Tenaga Nasional Berhad (TNB) has both a rich and deep-rooted history in Malaysia, building the nation’s infrastructure even before the country received its independence.
With 67 years of experience, the Company is Malaysia’s leading electricity utility throughout the value chain of generation, transmission, distribution and retail.
As Datuk Seri Ir. Azman Bin Mohd, the Company Chief Executive Officer goes onto explain: “The experience of working for TNB has led us towards building a performance and growth driven culture based on building trust and relationships, beginning our journey by looking at the respective strengths that already made us a great entity.
“If we were to go back in history and recall the development of Malaysia from a rural economy to what it is today, it is clear that by bringing electricity to homes, TNB was able to make a significant difference in the lives of people who before then have not had access to 24-hour electricity. Imagine not being able to read books at night. With electricity, lives of people, families and societies have been able to change for the better and as TNB, we are so privileged to be able to serve people this way. My colleagues can tell you heart-warming stories of how ordinary people react when they first experience electricity in their own homes, and how much of a difference in their lives this makes. With electricity, people have been empowered. Moving forward, we will continue to serve society by empowering them in different ways – electricity is and remains but one way of empowerment. With developments in technology, such as renewable energy, energy storage, connectivity, data analytics, and the Internet of Things, we see even more ways of empowering people further. We also look within the organisation and how we can even empower our employees through the use of technology in order to change the way we work, manage and lead; by given our employees new skills, new opportunities, and new exposures. These are the core building blocks of our aspirations in Reimagining TNB.”
The vision for TNB is to not only be an ordinary electricity business entity, but also one that has the expertise and ability to offer several other services that may not even be related to the energy business.
“We have always aspired to be a globally renowned Company and at present are building the foundations, as well as putting in place the resources to carry our brand to the international stage,” continues the CEO. “We are well aware of the challenges facing us in regards to technology disruptions, emerging market economies, greater demands from shareholders and customers as well as increased competition globally.”
Capitalising on creativity
In the everchanging market of energy & utilities, TNB needs to ensure that it is keeping abreast of the endless technological advancements occurring at present.
“These advancements can be utilised to increase both the efficiency and productivity of our service offering, while also creating a new product and services that lead to customer empowerment and satisfaction,” affirms the Company. “In the era of IoT that we are working in, we have to remain competitive by leveraging the latest technologies, capitalising on creativity and innovation in order to create business opportunities through establishing strategic affiliations and partnerships with industry leaders,” says Datuk Fazlur, TNB’s Chief Finance Officer.
The energy sector is completely saturated with opportunities for a company such as TNB; at present there are three main utilities in Malaysia which include, Tenaga Nasional Berhad, Sabah Electricity Sdn Bhd and Sarawak Energy.
“We are proudly the largest industry player that serves 9.39 million customers in Peninsular Malaysia, with the important responsibility of providing electricity to the country’s businesses, homes and industries,” Datuk Fazlur adds. “Over the years we have ensured that the electricity industry that we support is always reliable, secured and that the platforms are on par with the other developing countries.”
External and domestic challenges
There are a wide variety of challenges both externally and domestically that TNB has had to foresee over the years, and subsequently has provided it with extensive experience within the industry. The external challenges faced are those that affect the global energy sector, for example economic shifts, technology disruptions, higher shareholder expectations, increasing pressure for cost efficiency and competitive intensity from regulators.
“At present Peninsular Malaysia’s electricity supply industry is converging into quite the perfect storm,” continues Datuk Azman. “The electricity demand growth is forecasted to slow down to approximately 1.54 percent as we approach 2020.
“The main changes to the industry landscape are linked with the deregulation of the gas market, providing a first step towards market-based pricing and eventually this will lead to the progression of the electricity market.”
Although Malaysia currently have the lowest electricity tariffs in the region, we are facing a challenge due to escalating costs of fuel. The imbalance cost pass-through mechanism ensures that TNB remains neutral to the fluctuation of fuel prices but there is a need to communicate this more effectively to the customers.
We are also noticing greater demand for green energy, which calls for decarbonisation (reduction of greenhouse gas emissions by 70 percent by 2050) and decentralisation (due to technological breakthrough leading to reduction in costs for solar PV and batteries).
When bearing these factors in mind in relation to the future of the Company, TNB has outlined its strategic direction as part of its reimagining that consists of four pillars. These pillars include future generation sources, grid of the future, winning the customer and future proofing regulations to embrace challenges with specific strategies to turn them into opportunities.
The reimagining of TNB will focus on shaping the Company into becoming one of the top 10 global utility companies in terms of market capitalisation by 2025.
With thanks to its extensive experience, the Company has developed into a top utility business in Malaysia, with its core business focusing on generation, grid and distribution.
“At TNB we are lucky to have a reasonably robust financial position, with extensive manpower experience that means we are able to execute major initiatives and developments that require huge investment and commitment,” states Datuk Fazlur. “However, we do have to remember that as a public listed Company, we are also answerable to our shareholders and stakeholders and obliged by our sound risk management.”
Says Hj. Jalaluddin Megat: “We are also guided by the reimaging of our TNB strategy, venturing into new businesses and opportunities beyond our conventional business and territories. As a result of this during the past few years, we have been able to expand our international footprint, establishing our name into countries such as Pakistan, Saudi Arabia, India, Turkey and the UK.”
From a domestic point of view, TNB is also venturing into adjacent businesses to the energy industry in the local market and other business-related services that provide them with more empowerment and options in the way that they consume their daily electricity.
“Through our domestic and international investments as well as operational cost efficiency measures, we expect to increase our EBIT by 30 percent in the next three to five years,” says Datuk Azman.
TNB Energy Strategy
As part of the Company’s 10-year strategy in the lead up to 2025, it is quickly showing signs of achieving the aspirations of becoming a top energy player globally.
The strategic plan has been formulated through the careful consideration of the four global trends seen dramatically impacting the utilities industry, comprising the shift in economic power to Asia, technology disruptions, the end of cheap capital and evolving regulatory developments.
TNB believes that these trends have the potential to substantially reshape the future of the Company, presenting many exciting opportunities and capitalising on the trends that will enable it to unlock new growth areas. The four pillars include: future generation sources, grid of the future, winning the customer and anticipating future regulations changes.
The Conference of the Electric Power Supply Industry (CEPSI) is recognised as one of the largest and most prestigious events in the electricity supply industry in the Asia Pacific region.
The first edition of the CEPSI event was held in Hong Kong in 1976 and has since been successfully organised biennially with the most recent even held in Bangkok in 2016.
CEPSI plays host to an array of power industry companies, utility leaders, industry professionals and experts from all over the world. The event provides a premier platform to gather, exchange ideas and learn from each other, while also being a renowned avenue for industry players to showcase technologies, products and services.
The next edition of CEPSI 2018 will be hosted in Kuala Lumpur by TNB and held at the Kuala Lumpur Convention Centre, Malaysia from the 17 – 22 September, 2018. The event is expected to host more than 2,000 delegates that include high-profile industry CEO’s, key decision makers and C-Suite leaders who innovated within their respective organisations.
As Malaysia’s leading utility company, TNB is aware that its value not only lies within providing access to electricity to homes and businesses throughout the country, but also through adopting sustainable practices and activities in its operations to improve societal and environmental outcomes.
“It is in this area that we are able to ensure the sustainability of our business, alongside the continued growth and development of the community and people that we are serving on a daily basis,” the Company explains. “As part of our efforts, we have put in place a Green Policy that guides us in our efforts to minimise our environmental impact by adopting sustainable practices,” says Datuk Seri Ir Azman.
TNB has also successfully been expanding its portfolio of clean power assets to now include two ultra-supercritical coal-fire power plants, Manjung 4 and the recently commissioned Manjung 5, a large scale solar plant, biomass power plant and two biogas power plants.
On the whole the Company is extremely optimistic about the future of both the industry and its operations, hoping that moving forward in the next three to five years it will have approximately 50 percent of its restructuring implemented.
“It will be exciting to see how TNB has fared since the strategy’s inception and how far we will have to go before we meet our objectives,” concludes Datuk Azman. “It is my hope that we will be able to achieve or even surpass the targets and aspirations set out in the strategy by that time, including becoming the ASEAN leader in renewables, building profitable business in South Asia, Southeast Asia and the Middle East.”
The journey to the top entails a shift in mindset and culture towards a more performance oriented and adaptive culture. “We are currently working towards ensuring that this culture is imbibed by the staff and ultimately adopted,” says Datuk Wira Roslan.
At the same time, TNB has begun the process of communicating with customers and the public on how TNB is progressively improving and easing the lives of customers through the imminent introduction of MyTNB, the numerous payment channels available today, ultimately delivering customer empowerment. And TNB will continue to communicate as implementation of the other new initiatives such as Smart Meter etc. take place.
“It is my hope that we will have made all of our customers digitally connected, receiving the opportunity to access real-time services and customised products and enabling us to build an even better reputation with our clients all over the world.”
CEPSI is regarded as one of the vehicles that embodies TNB’s aspiration by bringing the topic of Reimagining Utility of the Future to the forefront and inviting the world’s best utility players and experts to share, network and highlight the company’s goals, meet partners and set conversation going, even as The Company looks for like-minded partners from across the world.