From Speeding Tickets To Blackouts To Rm5 05b Tax Liability Watts Going On Tnb

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LAST week, large parts of the Klang Valley and Johor experienced a major power disruption. According to national utility giant Tenaga Nasional Bhd (TNB), the blackout followed a disruption at the Edra power plant in Melaka.
At the same time, there was already a tariff review in July. TNB told us the tariff revision was meant to fund upgrades, sturdier grid infrastructure, fewer outages and readying the network for the data-centre boom and growing demand.
That being the case, how then can a major outage involving several states lasting hours take place?

And among the affected areas include key commercial districts, like Bukit Bintang and Kepong.
Even the foreign media picked up news about how workers in The Exchange 106 @ TRX having to walk down 100 flights of stairs after lifts stopped working. That is almost as embarrassing as our FAM-FIFA debacle!
And then there is governance. If you are going to raise tariffs you need to show you are putting money to good use.
Money wasted on legal contingency?
But is TNB’s governance satisfactory enough for shareholders, the bulk of which are government-linked investment companies (GLICs) like the Employees’ Provident Fund (EPF) and Permodalan Nasional Bhd (PNB)?
Consider TNB’s tax dispute with the Inland Revenue Board of Malaysia (IRB). The dispute dates back to 2015 with Malaysia’s largest electricity utility facing a potential liability of about RM5.05 bil after the Federal Court ruled its claim for re-investment allowance (RIA) was erroneous for the years assessed.

To put it in perspective, TNB’s net profit for 2024 was RM4.69 bil, mostly boosted by foreign exchange gains.
It boggles the mind how a company’s tax liability can snowball into such a massive amount. Are there lapses in TNB’s internal processes?
The utility giant is not just any public listed company. It is one whose returns affect every day Malaysians in the form of dividends to institutions like the EPF and PNB  whose unit trusts include Amanah Saham Bumiputera (ASB) and Amanah Saham Malaysia (ASM)/ASM 2-Wawasan.
So pertinent questions to ask following the tariff revision is, whether the money going into the grid or into legal contingencies? Will shareholders’ see dwindling returns with a knock-on effect on our EPF dividends?
Related to governance is the speeding-ticket issue. The Transport Minister claimed recently that TNB which has 57 active speeding summonses ranks among the country’s top 10 firms for such offence.

This may sound trivial compared to a multi-billion tax claim but it speaks directly to corporate culture. A utility that manages the electricity network for the nation yet with its own fleet accumulating traffic offences sends a signal of lax internal discipline.
Put another way, after the tariff revision, a major outage still occurred amid questions about TNB’s governance. To say that there is a serious credibility gap is an understatement.
At the close of today’s (Oct 21) mid-day market break. TNB was up 14 sen or 1.07% to RM13.24 with 1.48 million shares traded, thus valuing the power utility at RM77.18 bil.  
Shamsul Mohd Shukri is a FocusM reader.
The views expressed are solely of the author and do not necessarily reflect those of  MMKtT.
- Focus Malaysia.

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