TNB’s Returns and Profit Surge: A Commitment to Growth, Responsibility, and Regional Connectivity

 

KUALA LUMPUR — Tenaga Nasional Berhad (TNB), Malaysia’s largest electricity utility, recently announced an 85% increase in third-quarter profits, sparking widespread discussions. While some linked this remarkable surge to higher electricity tariffs, the truth is more nuanced. The profit spike is primarily attributed to foreign exchange (forex) gains from coal price, which resulted from favorable currency movements. Without these gains, TNB’s underlying profit growth would have been a more modest 17%, reaffirming that its operational gains remain steady and not driven by tariff increases.

Beyond profits, TNB’s financial strategy reflects a balanced approach to fulfilling its obligations, investing in national priorities, and driving sustainability efforts under Malaysia’s National Energy Transition Roadmap (NETR) and regional energy initiatives like the ASEAN Power Grid (APG).

Understanding TNB’s Profit Drivers

TNB has clarified that its profits are not directly tied to electricity tariffs. Around 70% of electricity tariffs are allocated to fuel costs, such as coal and gas, which are influenced by global market fluctuations.

These pass-through costs do not directly impact TNB’s bottom line.

Furthermore, TNB’s returns, calculated using the Weighted Average Cost of Capital (WACC) x Regulated Asset Base (RAB) formula, are not pure profits but funds channeled towards obligations, community contributions, and infrastructure investments.

Nation’s Helping Hands: Taxes, Dividends, and Community Contributions

Taxes and Zakat Contributions

TNB is among Malaysia’s top contributors to government revenue. The company pays 24% of its taxable income as corporate tax, directly supporting public services, infrastructure development, healthcare, and education. Additionally, TNB allocates 2.5% of its qualifying income to zakat, fulfilling its obligations under Islamic principles to aid underprivileged communities.

According to a report by The Merdeka Times, TNB is ranked alongside Petronas and Maybank as one of the nation’s largest corporate contributors of taxes and zakat. These payments ensure that TNB’s financial success benefits the wider population by supporting essential national programs and providing direct aid to those in need.

Dividends Benefiting Malaysians

TNB’s financial success translates into tangible benefits for millions of Malaysians through its dividend payments. In 2023, the company distributed RM2.6 billion in total dividends, benefiting both institutional and minority shareholders. Among the primary beneficiaries are:

Employees Provident Fund (EPF): Receiving RM444.1 million, which supports the retirement savings of millions of Malaysians.

Permodalan Nasional Berhad (PNB): Allocated RM487.4 million, contributing to the wealth of Malaysians through popular investment schemes like Amanah Saham Nasional (ASN) and Amanah Saham Bumiputera (ASB).

Retirement Fund Incorporated (KWAP): Receiving RM197.4 million, which supports pension funds for retired civil servants.

These dividends provide financial security for account holders, investors, and retirees, illustrating how TNB’s financial performance directly benefits the rakyat.

Community Contributions: Empowering Through Education and Development

Beyond taxes and dividends, TNB has a strong commitment to corporate social responsibility (CSR). Under Regulatory Period 4 (RP4), the company has allocated RM600 million for community programs that directly impact Malaysians. Key initiatives include:

Educational Support Through Yayasan Tenaga Nasional (YTN)

TNB, through its foundation, offers scholarships to nurture talent for Malaysia’s energy and sustainability future. The TNB PRIME Scholarship, managed by YTN, invites high-achieving students to pursue studies at top global universities or Universiti Tenaga Nasional (UNITEN). For the 2024 intake, the scholarship focuses on strategic fields such as Electrical Engineering, Chemical Engineering, Environment/Sustainability, Data Science & Analytics, Accounting, and Computer Science. These scholarships are part of TNB’s effort to ensure a pipeline of skilled professionals who can drive innovation and sustainability in the energy sector.

Baiti Jannati

The Baiti Jannati Programme (PBJ) is one of Tenaga Nasional Berhad’s (TNB) flagship Corporate Social Responsibility (CSR) initiatives, designed to provide housing solutions for underprivileged communities in Malaysia. Launched in 2007, this program reflects TNB’s commitment to uplifting disadvantaged groups, including single mothers, elderly citizens, individuals with disabilities, and the rural poor. By building, repairing, or financing homes, PBJ directly addresses the critical need for safe and secure shelter, thereby improving the quality of life for its beneficiaries.

Since its inception, the program has achieved remarkable milestones. TNB has constructed more than 902 homes and repaired an additional 107, with an overall investment exceeding RM44 million. For example, in 2021 alone, TNB allocated RM6.4 million to construct or purchase 128 homes for marginalized groups. This includes homes for asnaf families supported through zakat funds and non-Muslim communities under the complementary Projek Mesra Rakyat (PMR) initiative. These homes provide not only physical shelter but also emotional security, allowing recipients to focus on other aspects of their lives, such as education and employment.

The success of the PBJ program is enhanced by its collaborative approach. TNB partners with organizations like Dewan Bandaraya Kuala Lumpur (DBKL) and the Selangor State Development Corporation (PKNS) to identify eligible recipients and execute projects effectively. These partnerships enable TNB to reach urban and rural communities efficiently and address pressing housing needs more holistically. For instance, a collaboration with PKNS in Selangor allowed TNB to settle outstanding home payments and carry out renovations for residents, directly alleviating financial burdens.

Looking ahead, TNB aims to expand the Baiti Jannati Programme by increasing the number of homes delivered each year. With ongoing collaborations and a focus on urban poverty, the program remains a cornerstone of TNB’s commitment to creating lasting social impact. This initiative is a testament to TNB’s dedication to empowering communities and fostering a sustainable and equitable future.

Anjung Kasih

The Anjung Kasih TNB program is a corporate social responsibility initiative by Tenaga Nasional Berhad in partnership with Yayasan Kebajikan Negara (YKN). This program provides temporary accommodation for patients and their families who need to stay near hospitals during extended medical treatments. The initiative is particularly beneficial for individuals from low-income households who face challenges affording accommodation while accessing healthcare in urban areas.

To date, TNB has contributed millions to fund the construction and operation of Anjung Kasih facilities at several major hospitals in Malaysia. For instance, a recent donation of RM6.5 million was allocated to establish facilities in three hospitals. These centers are fully equipped with essential amenities, offering a comfortable and supportive environment for patients and their caregivers during difficult times.

This initiative aligns with TNB's commitment to community welfare and sustainability, ensuring that access to healthcare support extends beyond just medical treatment to include essential living facilities. It also reflects the broader values of inclusivity and care that underpin TNB’s corporate ethos​

Back to School Program 

Tenaga Nasional Berhad (TNB) has long been committed to helping underprivileged families through its Corporate Social Responsibility (CSR) initiative, Program Ceria Ke Sekolah, previously known as the "Back to School" program. This initiative aims to ease the financial burden on B40 families by providing essential school supplies such as uniforms, shoes, bags, and stationery.

In 2024, the program continued its legacy by allocating RM3 million to benefit students across the nation. Since its inception in 2013, the program has supported over 36,000 families, distributing supplies directly to recipients through community leaders and TNB representatives.

For the upcoming year, TNB plans to extend this initiative to include children of its employees, further expanding its impact. This gesture highlights TNB’s dedication to both community welfare and employee appreciation.

Through such initiatives, TNB demonstrates its role not just as an energy provider but as a socially responsible organization committed to uplifting Malaysian communities.

Youth Development in Sports 

Tenaga Nasional Berhad (TNB) actively supports sports in Malaysia through sponsorships that cater to both professional competitions and grassroots development. These sponsorship initiatives go beyond branding and visibility; they form part of TNB’s corporate social responsibility efforts. By investing in sports, TNB not only enhances its public image and community connections but also supports Malaysia’s socio-economic and athletic development

Both JMFR and the TNB Night Run exemplify TNB’s strategy of using sports as a platform for community engagement, promoting a healthy lifestyle while reinforcing its dedication to environmental and social causes. Through these initiatives, TNB effectively merges its corporate goals with meaningful contributions to society, building stronger connections with its stakeholders.

In tower running, TNB sponsors Soh Wai Ching, Asia’s leading and the world’s second-ranked tower runner. This partnership highlights TNB’s dedication to niche sports while enhancing Malaysia’s visibility in international athletics.

TNB’s longstanding involvement in hockey further underscores its commitment to Malaysian sports. Since 2006, the company has been a major sponsor of the Malaysian Hockey League (MHL), including significant contributions even during the COVID-19 pandemic. For example, TNB allocated RM2 million for the 2021 season, ensuring the league's continuity and supporting Malaysia’s hockey athletes. Additionally, TNB plays a crucial role in grassroots hockey development through its sponsorship of the Selangor Hockey League (SHL), which resumed in 2024 after a five-year hiatus. This league focuses on nurturing young talent across divisions, fostering a pipeline of future athletes for national and international competitions.

TNB’s involvement extends to the Junior World Cup (JWC) Hockey, where it sponsored the Malaysian Hockey Confederation with a RM1 million contribution. This sponsorship reflects TNB’s broader vision of strengthening youth engagement and skill development in hockey, contributing to the sport's sustainability and prominence in Malaysia.

The Janamanjung Fellowship Ride (JMFR) is a celebrated cycling event organized annually by Tenaga Nasional Berhad (TNB). In its 13th edition in 2024, the event gathered approximately 2,000 participants from across Malaysia, highlighting its growing popularity and significance. The ride coincided with TNB's 75th anniversary, symbolizing its enduring legacy and commitment to community engagement. Covering a scenic 75-kilometer route through the Manjung district, including landmarks like Teluk Batik, Kampung Merbau, and Segari, the event not only promoted a healthy lifestyle but also supported local tourism and small businesses.

Themed “Ride Together: Energy. Progress. Sustainability,” JMFR underscored TNB’s dedication to environmental, social, and governance (ESG) principles. The event included impactful CSR initiatives, such as the donation of 75 bicycles and food boxes to underprivileged schoolchildren and families. These gestures reinforced TNB’s commitment to fostering community well-being while aligning with the UN Sustainable Development Goal 3, which emphasizes good health and well-being. Moreover, JMFR’s inclusion in the Perak state tourism calendar underpins its broader contribution to regional development​

The TNB Night Run complements the Janamanjung Ride as another initiative that blends sports with community building. This event is organized to foster unity and promote fitness among Malaysians. As a night-time event, it features unique courses illuminated to create a vibrant atmosphere, encouraging participants of all ages and fitness levels to engage in an exhilarating experience. The event resonates with TNB's brand message of "Energy, Progress, and Sustainability," showcasing its alignment with healthy living and societal growth​.

Environmental Sustainability 

In addition to providing housing, the program complements TNB’s broader sustainability and social development goals. It aligns with initiatives such as educational support through Yayasan Tenaga Nasional (YTN), environmental sustainability programs like tree planting, and financial aid for students. Through these interconnected efforts, TNB ensures that its CSR activities contribute meaningfully to both community welfare and environmental sustainability.

These initiatives contribute significantly to reducing carbon dioxide in the atmosphere, combating deforestation, and enhancing biodiversity. By engaging in such projects, TNB aligns itself with global efforts to address climate change and promote ecological balance.

For example, tree-planting programs have been instrumental in mitigating soil erosion, improving water retention, and enhancing the quality of air. TNB also supports urban greening initiatives, which bring environmental and aesthetic benefits to urban areas. These projects underscore the company’s commitment to creating a greener, more sustainable future while also involving local communities in meaningful environmental activities​.

Moreover, TNB integrates education and awareness into its environmental efforts. By engaging schools and communities in these initiatives, the company not only plants trees but also cultivates a sense of responsibility towards preserving Malaysia’s rich natural heritage​.

Promoting Energy Literacy and Sustainability

The Malaysia Energy Literacy Program (MELP) is an initiative by Tenaga Nasional Berhad (TNB) that aligns with its broader sustainability goals as outlined in its "Let’s Energise Malaysia’s Clean Future Together" campaign. MELP aims to enhance public understanding of energy issues, focusing on the importance of transitioning to cleaner and more sustainable energy practices. It is part of TNB’s commitment to delivering sustainability value under the pillars of Environment, Social, and Governance (ESG), which are integral to achieving the United Nations Sustainable Development Goals (UN SDGs)​

Through MELP, TNB seeks to empower individuals and communities by fostering awareness about energy efficiency, renewable energy, and the role of modern technologies like the Smart Grid. The program promotes informed decision-making regarding energy consumption, contributing to the national goals of reducing carbon emissions and transitioning to renewable energy sources. MELP also supports capacity-building efforts, such as the introduction of programs that upskill and reskill participants in emerging energy fields​

Incorporating MELP into TNB's overall strategy demonstrates its commitment to public education and inclusivity, ensuring that the Malaysian public is well-informed and prepared for the country’s energy transition. The program underscores the importance of partnerships and community engagement in creating a sustainable energy future

Infrastructure Investments: Supporting Malaysia’s Energy Transition

Repaying Debt for Existing and Future Projects

TNB has consistently demonstrated a strong commitment to meeting its debt obligations, reflecting its sound financial management and operational resilience. TNB has reinforced its financial strategy by balancing debt repayment with investments in renewable energy projects, supported by its robust credit ratings and innovative financial instruments.

TNB commitment to financial discipline and robust debt servicing is further validated by its excellent credit ratings. Both MARC Ratings and RAM Ratings have affirmed TNB’s corporate credit rating at AAA with a stable outlook, reflecting its financial stability and strategic importance to Malaysia’s economy. These ratings underscore TNB's ability to meet its financial obligations consistently and efficiently​

The high credit ratings are supported by TNB's solid revenue streams, cost-management initiatives, and strategic role in the nation's energy sector. Additionally, the company's long-term efforts to modernize its infrastructure and expand renewable energy capabilities align with its sustainable growth objectives. This financial strength, combined with proactive debt servicing, enables TNB to maintain investor confidence and access favorable financing conditions, ensuring its continued contribution to Malaysia's energy security​

Debt Repayment Details

As of Q3 FY2024, TNB reported significant progress in reducing its financial obligations. The company’s finance costs decreased by RM3,019.4 million due to strategic repayment of loans. TNB also achieved a gearing ratio improvement to 47.5%, down from 50.3% at the end of FY2023. This improvement reflects better debt management and efficient utilization of operational cash flows​.

Sustainability Sukuk Issuances

TNB also has undertaken several major infrastructure projects that align with Malaysia’s renewable energy goals and the need to modernize its energy systems. These projects, which require significant financial backing, demonstrate TNB’s commitment to increasing renewable energy capacity and ensuring sustainable energy solutions for the future.

TNB's sustainability-focused projects are strengthened by innovative bond issuances, including the RM2 Billion Sustainability Sukuk Wakalah, whose proceeds are directed towards renewable energy projects like the Nenggiri Hydroelectric Power Plant in Kelantan. This issuance adheres to TNB’s Sustainability Sukuk Framework, which has earned a “gold” rating from MARC Ratings, affirming its alignment with international sustainability standards​.

Additionally, TNB has pioneered the first Transition Finance Framework by a utility company in ASEAN. This framework facilitates the issuance of green, social, and sustainability bonds to fund energy transition initiatives. It complies with global guidelines such as the ASEAN Taxonomy for Sustainable Finance, positioning TNB as a leader in financing sustainable energy solutions​.

CAPEX for National Energy Transition Roadmap (NETR)

TNB is committed to supporting Malaysia’s decarbonization and sustainability goals under the NETR. Reports indicate that TNB has proposed higher capital expenditures (CAPEX) under RP4, with investments aimed at grid modernization, energy storage systems, and renewable energy integration. By funding these projects, TNB ensures Malaysia is equipped to meet its renewable energy targets while fostering economic growth through green investments.

Nenggiri Hydroelectric Dam: Located in Gua Musang, Kelantan, the Nenggiri Hydroelectric Dam is a RM5 billion project expected to supply 300 megawatts (MW) of green energy to the national grid upon its completion in 2026. This dam is designed not only to support Malaysia’s renewable energy aspirations but also to address local issues such as flood mitigation and clean water supply. It will significantly boost Kelantan’s energy security and create local job opportunities during its construction and operational phases​.

Sungai Perak Hydroelectric Scheme Refitment: This project involves the modernization of the Sungai Perak Power Stations with an investment of RM5.8 billion under the Hydro Life Extension Programme. The refitment will upgrade 18 generating units across six stations, adding a capacity of 650.75 MW to the grid. This upgrade is expected to contribute RM200 million annually to TNB’s earnings while enhancing the reliability and efficiency of Malaysia's hydropower infrastructure​.

Kenyir Solar Plant: This initiative, part of TNB’s push towards renewable energy, aims to integrate solar power with the Kenyir Hydroelectric Dam. The hybrid solution will increase renewable energy output while balancing generation during varying solar and hydropower availability, promoting grid stability and energy diversity.

These projects reflect TNB’s strategy of reinvesting returns into long-term infrastructure improvements, aligning with the government’s National Energy Transition Roadmap (NETR). They not only elevate Malaysia’s renewable energy capacity but also ensure the sustainability and modernization of the country’s energy systems. These efforts form part of TNB’s broader sustainability initiatives, which include significant contributions to environmental, community, and economic development.

Regional Integration: ASEAN Power Grid (APG)

TNB is a vital player in the ASEAN Power Grid (APG) initiative, which aims to connect the electricity networks of Southeast Asian nations. Malaysia’s geographic position makes it a critical hub for the APG, enabling cross-border energy trade with Thailand, Singapore, and Indonesia.

This regional integration enhances energy security, facilitates the export of surplus renewable energy, and reduces reliance on fossil fuels. By upgrading grid infrastructure and participating in interconnectivity projects, TNB is helping Southeast Asia achieve its sustainability and energy security goals.​

A Balanced Approach to Profits, Responsibility, and Innovation: The TNB Model

Financial Resilience Amid Challenges

Tenaga Nasional Berhad (TNB) has showcased its ability to weather global economic challenges, with a notable profit surge in recent periods. This growth, primarily driven by foreign exchange gains on coal procurement costs, underscores TNB's financial agility and robust operational strategies. Beyond these gains, TNB has focused on efficient cost management, leveraging technology, and maintaining high service quality to ensure consistent financial health.

Strategic Allocation of Returns for National Impact

TNB’s success extends beyond profit-making; it prioritizes contributing to Malaysia’s socioeconomic development. The company channels significant resources into taxes, dividends, and corporate social responsibility (CSR) initiatives. For example, programs like Ceria Ke Sekolah provide essential school supplies to thousands of underprivileged children annually, reflecting TNB's commitment to community welfare.

Driving Sustainability and Renewable Energy

A cornerstone of TNB's strategy is its investment in renewable energy. The company aims to achieve 8,300 MW of renewable capacity by 2025, focusing on solar, wind, and hydroelectric projects. Through initiatives like the Nenggiri Hydroelectric Project and grid modernization under its sustainability sukuk framework, TNB aligns itself with Malaysia’s National Energy Transition Roadmap (NETR) to reduce carbon emissions and enhance energy reliability​.

Regional Integration and Innovation

As a leading energy player, TNB contributes to the ASEAN Power Grid initiative, promoting cross-border energy trade and integration. Its investments in advanced grid technologies and digital solutions position Malaysia as a regional energy hub. By embracing innovation, TNB not only addresses current energy demands but also builds a resilient system to support future economic growth​.

Paving the Way for a Sustainable Future

TNB’s balanced approach to growth, social responsibility, and innovation embodies its vision of a sustainable and interconnected energy future. By reinvesting its gains into renewable infrastructure, modern grids, and public welfare programs, TNB demonstrates that profitability and social responsibility can coexist, setting a benchmark for energy utilities in Malaysia and beyond.