Electricity reserve margin could fall by 10 per cent if nothing is done to ramp up output in the next four years, says CIMB Investment Bank.

KUALA LUMPUR: Malaysia’s energy reserves have declined to an alarming level and the government should seriously take this into consideration, analysts said.

One of the steps the government could take is to urgently replace the ageing power plants, failing which they could be a strain on the energy reserves within the next 48 months, they said.

It could also jeopardise the
country’s vision of becoming a developed nation by 2020, analysts added.

Mercury Securities head of research unit Edmund Tham said electricity is one of the key components that drives the global manufacturing and services industries.

“A sustained energy crisis will slow down the economic engine, while a prolonged energy crisis could force investors to look elsewhere,” he said.

CIMB Investment Bank analyst Faisal Syed Ahmad said energy reserves could fall by 10 per cent during the said period if the government did nothing within the next four years to ramp up output.

“The (national) grid may have lower-than-expected reserve margins and this may increase the risk of outages.

“Given the outages, the reserve margin could fall by 10 per cent
as opposed to approximately 31
per cent, assuming both the
power plants do not have any issues,” he wrote in a report two months ago.

Maybank Investment Bank
head of retail research Tee Sze
Chiah said Malaysia’s electricity
demand is expected to grow by
three to four per cent per year,
almost duplicating the country’s gross domestic product growth from 2000 to 2013, which stood at about 4.4 per cent.

“Demand for energy is not restricted to Malaysia alone as it is happening everywhere in the world.

“However, in Malaysia’s case, there is an urgent need to replace the ageing plants,” he said.

In 2012, the-then Tenaga Nasional Bhd (TNB) chief executive
officer Datuk Seri Che Khalib Mohamad Noh said the demand for electricity had exceeded supply with some industries not getting the power they needed.

“There is a need to plan carefully for power system development,” he was reported as saying at a forum entitled “Is Nuclear Energy An Option for Malaysia”.

Currently, the national utility is the biggest supplier of electricity
in Peninsular Malaysia, while
Sabah Electricity Sdn Bhd and Sarawak Electricity Supply Corp are the suppliers for Sabah and Sarawak, respectively. Bernama