KUALA LUMPUR (Dec 19): Shares in Tenaga Nasional Bhd (TNB) rose in early trade on Monday (Dec 19), after the Government said it is implementing a targeted electricity subsidy that will see all domestic users continuing to enjoy the two sen per kWH rebate on their power tariff for the period of Jan 1 to June 30, 2023.
At the time of writing, TNB was up 0.66% or six sen at RM9.21 a share, with 377,500 shares traded.
Last Friday, the Government said it will also not increase the 3.7 sen per kWh surcharge on farmers and animal breeders as well as low-voltage non-domestic users such as micro businesses, and small and medium enterprises (SMEs) (including restaurants, groceries, bakeries and small workshops).
In a note on Monday, Hong Leong Investment Bank Research maintained its “buy” rating for TNB, with an unchanged TP of RM11.65, based on discounted cash flow to equity valuation.
It said Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad had said the Government will continue to bear a total of RM10.76 billion in subsidies to maintain electricity tariffs at the current rates for domestic, low-voltage and specific agricultural users.
“The Government will subsidise RM10.76 billion, and the remaining RM5.44 billion passed through to non-domestic users.
“In summary, there will be no change to existing tariff rates except for non-domestic users (excluding micro-business, SMEs and the farming sector) for a significantly higher surcharge of +20 sen/kWh (from +3.7 sen/kWh).
“We are positive that this development verifies that the Imbalance Cost Pass-Through mechanism is being honoured in a more sustainable manner, with some of it being passed on to end users, rather than continued unsustainable subsidies by the Government,” it said.
