Malaysia may cut power tariff if coal below $75/t

KUALA LUMPUR, Nov 10 (Reuters) – Malaysia will consider cutting tariffs charged by state-owned power company Tenaga Nasional (TENA.KL: Quote, Profile, Research, Stock Buzz) if the price of coal drops below $75 a tonne for three months, state news agency Bernama reported on Monday.

“If the coal price falls to below $75 per tonne for three consecutive months, I will ask the Energy Commission to review the possibility of reducing the electricity tariff,” said Energy, Water and Communications Minister Shaziman Abu Mansor.

“But to date and over the past five months, the coal price has continued to increase,” said Shaziman when asked if the government would reduce the electricity tariff following the fall in crude oil prices.

The government approved in June a price hike for Tenaga as part of a move to cut costly fuel subsidies when crude oil traded at around $125 a barrel.

Coal is the second most important fuel source for Tenaga after natural gas. Tenaga pays a fixed price for natural gas supplied by state oil company Petronas, but the cost of coal moves in tandem with market rates.

Tenaga told analysts last month it had locked in its fiscal first-quarter coal requirement at $114 per tonne. It also said it would secure its remaining coal requirements at spot prices.

Coal prices for power generators in Australia, a benchmark for Asia, bounced back above $100 a tonne last week. (Reporting by Soo Ai Peng, editing by Will Waterman)

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