SESB faces five main challenges: Tangau
Published on: Friday, December 29, 2023
By: Jonathan Nicholas
Madius (middle) with SESB CEO Ts Mohd Yaakob Jaafar (right) and SESB Corporate Services General Manager Khadijah Sutrisnoh (right) glimpsing through The SESB Story.
Kota Kinabalu: Sabah Electricity Sdn Bhd (SESB) Chairman Datuk Seri Madius Tangau listed five main challenges it faced, naming financial sustainability as the most critical.
He said SESB relies too heavily on Tariff Support Subsidy (TSS) from the Federal Government to keep the tariff below the cost of electricity generation and transmission. In 2022 alone, the TSS reached RM862 million.
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“It’s a fairly large amount, showing that we need to take strategic actions immediately to ensure that every corner of Sabah is supplied with consistent, high-quality and sustainable electricity.
“Today, SESB sells electricity at an average basic tariff rate of 34.52 sen per unit of electricity (sen/kWh), much lower than the average cost of generation which is 43.83 sen/kWh.
“This rate difference results in an average loss of 10 cents/kWh for each unit of electricity sold.
“Obviously, subsidies are not a sustainable solution. Without TSS and as a business, SESB is technically insolvent,” he said.
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On financial sustainability, Madius said it is important for the state to draw up a precise direction to reduce dependence on any party including Government subsidies.
“For this purpose, it is critical for SESB to have its own electricity generation capacity, at least the main load or base load generated and owned by SESB as much as 700 MW,” he said.
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Madius said the main strategic challenge is ensuring reliable power supply to all areas in Sabah and the Federal Territory of Labuan.
However, there are key districts from a socioeconomic point of view such as Ranau and Telupid which are still not connected to the Sabah Grid.
“This has great implications for the distribution and provision of electricity to the areas involved. This challenge is also a priority for SESB.
“SESB is working hard to address the reserve margin which is currently around 12 per cent. This position does not reach the 30 per cent target that has been set by the authorities, especially in setting prudent utility practices.
“Limited reserve capacity makes the power supply vulnerable to stress or supply interruptions during peak hours or unexpected interruptions.
“This has the potential to result in blackouts, which is a difficult and undesirable situation for consumers. As the main electricity utility entity in Sabah, SESB has a responsibility to ensure the integrity of the electricity supply at all times,” he added.
Another challenge was to reduce the System Average Interruption Duration Index (SAIDI).
The current SAIDI value is around 274.43 minutes compared to 4,109 minutes in 2005, 424 minutes (year 2013) and 302 minutes (year 2022).
“Much progress has been made in terms of SAIDI values, but SESB is working hard to further reduce them.
“In order to guarantee reliable and reliable electricity supply to all areas and throughout Sabah, SESB aims to reduce SAIDI up to 100 minutes by the year 2030.
“The gap between these figures requires introspection, namely how SESB can strengthen the internal framework to maintain energy resources that is smooth and promising.
“The answer lies in the potential supply of manpower and untapped resources in generating SESB operations,” Madius said, during the launch of “The SESB Story” in conjunction with its silver jubilee, Christmas and the 2024 New Year celebrations at Pacific Sutera, Thursday.
The book highlighted the utility company’s establishment under the Sabah Electricity Board in 1957 administered by the State before handed over to Federal and subsequent return to privatisation.
“Although the management of the electricity sector should be in the federal list after the formation of the Federation Malaysia on 16 September 1963, the sector remained under the State Government until 1983.
“It went on for 20 years. This question still has no concrete answers until now,” the Tuaran MP said.
Madius said 200 copies of the book were printed where most will be going to leaders which he hoped would be used as a guideline in the next State Assembly or Dewan Rakyat sitting.
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