Through 99 years

THE YEAR: 1894. The place: Rawang. Electrical power first made its appearance in Malaysia 99 years ago when two tin miners, Loke Yew and Thamboosamy Pillai, used an electric generator to pump water from their tin mine. A year later in May 1895, the Kuala Lumpur Railway Station was installed with electric lighting - the first of its kind in KL. From then on, there was no turning back. The year 1900 marked the operation of the first power station in the Peninsula. This was the Sempam Hydro Power Station in Raub, Pahang. It was built by the Raub-Australian Gold Mining Co Ltd. The other states soon followed. Penang was first electrified in 1904 with the commissioning of the Sungai Pinang Power Station. In 1905, Kuala Lumpur received electricity for the very first time, supplied by the Ulu Gombak Hydroelectric Power Station. In the early years, electricity was provided by a number of private companies. For example, in the late 1920s Kuala Lumpur was further supplied with power by the Ulu Langat Hydroelectric Power Station, which was owned by Sungei Besi Mines Ltd. Melaka obtained its public electricity from the Malacca Electric Lighting Co in 1913. And two years later, Johor Bahru was provided with power by Central Engine Works Ltd. In 1916, it was Seremban's turn. The town received its first electricity from a station operated by United Engineers. Up in Kedah, Huttenbachs Co Ltd started to provide Bukit Mertajam, Sungai Petani and Alor Star in 1920. Throughout the 1920s Huttenbachs also provided electricity to other parts of Kedah and parts of Province Wellesley and Perak, Kuala Pilah and Tampin in Negri Sembilan, and Pulau Sebang in Melaka. In 1926, the Perak River Hydro Electric Company Ltd was set up to cater to the electricity demands of the tin-rich Kinta Valley. In 1927, the Federated Malay States Electricity Department was established. During the Second World War, the British forces followed an `enemy denial' policy. In the face of advancing Japanese troops, the retreating British destroyed vital infrastructure and other utilities, including power plants and equipment. However the Japanese army managed to rehabilitate nearly half of the power stations to operating status. When the British administration returned to Malaya at the end of the war, they regionalised electrical supply into the Northern, Central and Southern sectors. But power was still in many hands - with the central government, local authorities and private companies operating their respective electrical installations. All this changed in 1949. The Electricity Ordinance No 30, which came into force on Sept 1 that year, established the Central Electricity Board (CEB) which was given the responsibility for generating and distributing electricity. The 40MW Connaught Bridge power station in Klang, Selangor was the first station to be commissioned by the CEB. A 66kV high voltage transmission line between Connaught Bridge and Kuala Lumpur and further south to Bangi, Seremban and Melaka was also commissioned at the same time. This marked the beginning of the national grid. In 1956, the rural electrification programme was launched under the First Malaysia Plan (1956-60) with an allocation of RM4.6 million. Under the programme, the CEB provided perimeter security lighting for centralised new villages in remote areas using diesel generation sets. With the declaration of independence in 1957, `Malaysianisation' of the CEB gradually took place with Malaysians being trained to take over operations. Up till then, most CEB senior officers were expatriates. In 1963, the CEB completed the first of its immense hydroelectric schemes in the Cameron Highlands. The same year, the Sultan Ismail Power Station was opened in Johor. On June 22, 1965, the CEB was renamed the National Electricity Board of the Sates of Malaya (NEB). Between 1964 and 1982, the NEB consolidated the generation, transmission and distribution of electricity within itself by taking over the installations of several privately owned entities. For instance, it took over Huttenbachs' installations in 1964. In 1976, it took over the Electricity Supply Department of the Penang Municipal Council. In 1982, it was the turn of the Perak River Hydro Electric Power Co Ltd and its subsidiary Kinta Electric Distribution Ltd. The 1970s saw the government adopting the four fuel policy. Soaring oil prices in the early 1970s decreed that a diversified mix of oil, coal, hydro power and natural gas for power generation was the best policy. The electrical giant has so far foresworn nuclear power, though that eventuality has not been discounted. There is no clear cut choice of fuel as the priority is flexibility. Economics is not necessarily the deciding factor when it comes to choice of fuel. Hydro power is the cheapest in terms of operating costs but capital investment is prohibitive as is site suitability. Coal is relatively cheap and stable in price but bulky to store and transport. Oil prices have been volatile since the early 1970s. For example, during the 1991 Gulf War, oil prices escalated to US$28 per barrel from US$10 per barrel. However most analysts expect the benchmark West Texas crude to remain around US$17 per barrel for the rest of 1993. However, the fuel of choice for the future increasingly is natural gas since fuel accounts for 50 per cent of operating costs. Gas is a cleaner fuel and more importantly, Malaysia possesses an abundance of it. On July 1, 1990, the NEB was corporatised under the Electricity Supply (Successor Company) Act 1990. In line with the government's privatisation policy, Tenaga Nasional Berhad was incorporated as a public limited company under the Malaysian Companies Act 1965. On Sept 1, 1990, all properties, rights and liabilities owned by the NEB were transferred to Tenaga. Tenaga's operations are regulated through a licence issued by the directorgeneral of electricity supply who was appointed by the minister of energy, telecommunications and posts. The licence dated Sept 1, 1990, entitles Tenaga to use, work, operate any electrical installation on Peninsular Malaysia. The licence is for a non-renewal period of 21 years effective Sept 1, 1990. It contains a number of provisions aimed at maintaining Tenaga's pre-eminence as the generator, transmitter and distributor of electricity. However, the Malaysian government's dedication to competition has witnessed a gradual erosion of the utility's monopoly position. In return, the utility company has a duty to continue with rural electrification and is required to obtain the approval of the authorities before changing the electricity tariff based on the CPI-M+Y formula (where CPI is the Consumer Price Index, M denotes efficiency and capital expenditure, and Y the fuel component). On May 28, 1992 Tenaga was listed on the Kuala Lumpur Stock Exchange at RM8.00, a premium of RM3.40 above its issue price of RM4.50. It was the largest float in the history of the KLSE. Tenaga is the largest company on the KLSE with a market capitalisation of RM33.3 billion (on Aug 20, 1993).

Author(s): By Jacqueline Ho
Copyright: -
Published on: 1 September 1993
Publication: Malaysian Business
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