Powering the nation for over a decade
Successful Privatization in the early 1990s has paved the way for TNB to become a shining beacon in Malaysian industry

Minister of Finance and Public Credit: has delivered

Tenaga Nasional Berhad (TNB) is Malaysia’s premier electricity company, representing a 60% share of the country’s growing energy market. With over US$1.5 billion in assets, and an annual revenue growth registering 7% since 2002, TNB is the recognized leader in the generation, transmission and distribution of electricity in Malaysia.

The company’s long history has culminated in a national success story; originally established as the Central Electricity Board in 1949 (later changed to the National Electricity Board in 1965), TNB was privatized in 1990 and listed on the Kuala Lumpur Stock Exchange in 1992, where today the company has one of exchange’s largest market capitalizations. It can now be seen that TNB has undeniably been one of the Malaysian government’s most successful privatization efforts.

Serving 6 million customers throughout Peninsular Malaysia and Sabah, TNB has a diversified range of business activities. The company has a complete power system, including the National Grid, Customer Service Centers, Call Management Centers, and administration offices throughout the national territory. Through its subsidiaries, TNB is involved in the manufacture of transformers, high voltage switchgears and cables, and provides professional consultancy services, as well as carrying out architectural and civil and electrical engineering jobs and services.

The company also boasts a complete range of maintenance and repair services. In addition to offering higher education at its university, Universiti Tenaga Nasional, TNB undertakes research and development, property development and project management services.

Over the last 50 years, the Generation Division has developed its expertise to operate, maintain and manage several power plants of various types. In Peninsular Malaysia, the Thermal Operations Department operates seven thermal power stations with a total installed capacity of 6,863MW. TNB operates another 2,070MW from its Manjung coal-fired plant. In addition, the Hydro Department operates hydroelectric power generation through three main schemes with a total installed capacity of 1,910MW. All thermal and hydro power stations have been accredited under ISO 9000. In addition, all thermal power stations including the Sultan Mahmud and Chenderoh hydro power stations are also accredited with the ISO 14001 certifications.

In addition to the corporatization process TNB carried out throughout the 1990s after privatization, the company faced a further comprehensive transformation in 2002 –2004 aimed at redefining operations, reducing costs and increasing profit margins, while expanding growth. The transformation was based in efforts to streamline business techniques, transform operational methodology, implement management change, incorporate higher levels of ICT, and cultivate a culture of excellence among its employees. These measures produced instant results. For the fiscal year ended 31 August 2004, TNB registered a total revenue increase of 7.6% over the previous year, to $4.7 billion from $4.3 billion in 2003. Revenue from electricity sales contributed to 97.2% of the Group’s total revenue.

TNB has been successful in dealing with increased market competition since 1994 when the Malaysian government opened the electricity sector and granted 15 licenses to Independent Power Producers (IPPs). The IPPs, who are connected to clients through TNB’s national grid, currently produce 7,000MW and have invested more than US$3.5 billion in the sector. The presence of IPPs in the Malaysian market has presented TNB with new opportunities for partnerships that will support the company’s goal of an increased global presence, as well as its fundamental mission to aid in Malaysia’s development and contribute to the success of the country’s Vision 2020. In the near future, TNB hopes to increase its activity in the ASEAN (Association of South East Asian Nations) region, which represents a combined market of 250 million people. A multilateral agreement to open up national power sectors within the ASEAN region to ASEAN companies has been reached, and TNB is considering joint ventures with other Malaysian IPPs for developing new regional projects.

Forward looking strategy means future is bright

In striving to strengthen its leadership edge, Tenaga Nasional Berhad (TNB) has developed a five-year strategy called T7 that aims to convert the company into Malaysia’s best- run corporation by 2007. T7 is based on seven building blocks that form the foundation of the company’s quest for excellence: strategy and direction, planning and budgeting, organizational structure, business process re-engineering, performance management, technology and competence, and shared values and culture. An additional eight corporate programs have been added to the original 38 initiatives that were developed in 2002, and the company has clearly communicated its strategies across the board throughout the organization, emphasizing effective cost management and operational improvement. To date, all 38 initiatives have been implemented and are already producing encouraging results – there has been a positive rise in TNB’s key financial indicators and core business divisions are registering significant growth in performance.

Three organizational mechanisms are now in place to ensure the ongoing success of the strategy: a realigned business planning and budgeting process, a streamlined organizational structure, and a performance tracking system to monitor progress. TNB has regrouped and reconsolidated its corporate structure in an effort to align its business activities more closely to its three core businesses of electricity generation, transmission and distribution. The company has also implemented a new performance management system and all top managers must meet specific targets and key performance indicators. The company has also implemented the Enterprise Resource Management System to streamline current business processes in accordance with the company’s new structure and its overall strategy. An integral part of the T7 strategy is TNB’s goal of achieving TIGER Scenario.

The TIGER Scenario aims to improve the product development and manufacture process through advanced engineering collaboration between the primary corporation and its suppliers using standards-based design, analysis, and manufacturing tools. This reduces time-to-market times and design revisions by allowing all the elements in the development process to work more closely together. With this and its other T7 strategies, TNB anticipates significant benefits that will in turn fuel further growth for the company.

Success story transmitted across Malaysia

TNB has been providing excellence in its products and services in the Malaysian power industry for over fifty years. The company now provides electricity to 100% of Peninsular Malaysia and covers most of the territory in the Malaysian province of Sabah. The fact that Malaysia’s electrical utility sector has been federally organized throughout most of its history has worked in the country’s favor. Well coordinated from its inception, the sector funneled its resources into the strengthening of the overall system and the country’s National Grid has been able to expand successfully throughout the last century. TNB (then the National Electricity Board) embarked on a comprehensive rural development program in the 1970s. By the early 1990s the program had achieved its objective – 100% rural electrification throughout the Malaysian Peninsula. Liberalization of the electricity supply industry throughout the 1990s further boosted investment in the sector – Independent Power Producers (IPPs), along with majority state-owned TNB, Sabah Electricity Sdn Bhd and Sarawak Electricity Supply Corp, have invested US$9 billion in Malaysia’s generation, transmission and distribution capacities to date, and are expected to invest nearly the same amount again over the next ten years.

The National Grid represents the backbone of the electricity industry, and TNB’s Transmission Division manages and operates the 132kV, 275 kV and 500kV transmission systems that form the country’s integrated network.

TNB’s National Grid system spans the whole of the Peninsular Malaysia, connecting power stations owned by TNB and IPPs to customers. The grid is interconnected to Thailand’s transmission system via a HVDC interconnection with a transmission capacity of 300MW and a 132kV AC overhead line with maximum transmission capacity of 80MW. In southern Malaysia, the National Grid is connected to Singapore’s transmission system at Senoko via 2 X 230kV submarine cables with a firm transmission capacity of 200MW.