THERE is growing concern about Tenaga Nasional Bhd’s (Tenaga) likely strained cash flow, as the electricity tariff is not rising fast enough to cope with escalating fuel costs. The utility group will have to borrow more to sustain its operations, as it needs to fork out a bigger sum in advance in view of the big jump in fuel prices. They had believed that Tenaga would be immune to high fuel prices owing to the fuel cost pass-through mechanism. The average coal price agreed upon by the government and Tenaga for the Regulatory Period 3 (RP3) is not known. The credit agency believes Tenaga will be able to pass on any under- or over-recovery of fuel costs through tariff adjustments.
