From a Malaysian utility firm to a major global player: Reimagining Tenaga Nasional Berhad
With over 9.3mn customers in Peninsular Malaysia, Sabah and Labuan, Tenaga Nasional Berhad (TNB) is now a household name, standing proudly as the largest electricity utility in Malaysia.
In providing electricity to the region’s businesses, homes and industries, the utility firm has truly helped to develop and empower the nation, all whilst championing an unwavering commitment to sustainability. But now, what is the next step for the utility giant?
With its meticulous 2025 vision – ‘Reimagining TNB’ – the company’s CEO and President, Datuk Seri Ir. Azman Mohd, explains how the utility company wants to build on its rich legacy and become a top 10 global utility player by 2025. In doing so, TNB hopes to empower people for a better life and a better future.
“TNB is a born and bred Malaysian company, which has a rich and deep-rooted history in building the nation, even before the country received its independence,” reflects Azman. “With 67 years of experience, TNB is Malaysia’s leading utility player throughout the value chain of Generation, Transmission, Distribution and Retail.
“Guided by the ‘Reimagining TNB’ strategy, TNB is now venturing into new businesses and opportunities beyond our conventional business and territory,” he continues. “Over the past few years, TNB has expanded its international footprint, having established its name in countries such as Pakistan, Saudi Arabia, India, Turkey and the United Kingdom, making TNB one of the largest electricity companies in Asia.”
Rising to the top of the ranks is no easy task but TNB believes it has a meticulous plan for success. Based on four key pillars, TNB’s new strategic vision aims to: find future generation sources, create the grid of the future, win the customer and futureproof regulations.
Tenaga Nasional Berhad
A greener future
As part of its so-called future generation sources strategy, the electricity utility is shifting its focus towards renewables, aspiring to be the ASEAN leader in renewable energy. “So far, we have secured 741 MW of renewable energy capacity globally,” comments Azman.
In keeping with this strategy, TNB has undertaken a series of acquisitions and investments in the renewable sector. In March, for instance, the firm snapped up an 80% stake in Bluemerang Capital and Temporis Capital-managed GVO wind.
“This acquisition complements TNB’s solar renewable assets in the UK by ensuring a stable portfolio revenue generation all year round,” explains Azman. “Wind energy assets, in general, generate more revenue in the winter period whilst solar assets generate the most revenue in the summer months.”
Additionally, the Malaysian firm has set itself the task of creating the grid of the future by promoting greater digitization and automation. As such, it is set to introduce smart meters and advanced metering infrastructure facilities for its customers and implement data analytics, analysis and automation of its operations.
“As the backbone of the electricity system, the grid represents the single most impactful component of the energy industry and a country’s energy needs,” notes Azman. “Therefore, we do not expect grid operations to stay the same as we progress into the future. We are looking to invest in technological advancements that will allow for greater digitisation and automation of the grid. This will lead to improved performance and reliability, which will ultimately benefit our customer.”
The third critical pillar of TNB’s strategic vision – winning the customer – underscores its plan to create new and enhanced services and products. After all, when stripped down to its core, the focus of any successful business is simple – to meet the demands of the customer.
Putting its customer at the heart of its strategic plan, Azman describes how TNB intends to promote a value-centric understanding of its customers.
“This means looking at customers as more than just a meter and understanding their values and needs beyond their kWh consumption,” he explains. “We have already identified several specific projects ranging from energy management to smart city utility services with various government agencies and corporate entities.”
This customer centric-focus is also echoed by Datuk Fazlur Rahman Zainuddin, TNB’s Chief Financial Officer, who highlights that an unwavering commitment to customer satisfaction is at the foundation of the 67-year old company’s legacy.
“Our simple business philosophy at TNB is that it’s all about serving the needs of people,” he says. “Businesses must be clear of whom they serve and understand these people well. The moment businesses lose sight of this is when the firm loses its value proposition and thus profits or worse, loses its license to operate.”
“Many words can be used to describe Tenaga Nasional Berhad, however, I prefer the simple description of ‘empowering people’,” he stresses. “If we were to go back in history and recall the development of Malaysia from a rural economy to what it is today, it is clear that by bringing electricity to homes, TNB has made a significant difference to the lives of people who, before then, didn’t have access to 24-hour electricity.
“With electricity, lives of people, families and societies have been able to change for the better and as TNB, we are so privileged to be able to serve people this way.”
Upholding high regulatory standards
Keeping pace with the ever-evolving regulatory environment, as the fourth and final pillar of TNB’s strategic plan, involves assisting the government in the execution of regulations and policies in the energy sector.
In recent years, the government has implemented Malaysian Electricity Supply Industry (MESI) reform initiatives which notably introduced Incentive Based Regulation (IBR) and Imbalance Cost Pass-Through (ICPT) mechanisms.
Meanwhile, in 2015, the government also launched a subsidy rationalisation programme and later it established a ring-fenced single based buyer, amongst other reforms. Such regulations ensure that TNB operates efficiently and charges customers competitively priced electricity tariffs. This also promotes transparency, robust finances, and sustainable investments. As such, TNB is keen to collaborate with stakeholders to keep pace with today’s evolving regulatory environment.
“Regulations make up a vital enabler of our business,” notes Azman. “We must, therefore, continue to work closely with the relevant stakeholders to maintain a conducive operating environment and ensure we have the regulatory support we need to achieve both our and the regulator’s aspirations.
“Additionally, it is imperative that we remain perceptive and responsive to regulatory developments in both domestic and foreign markets where we operate, so we can work harmoniously with the electricity industry laws that govern our sector.”
A strategy for success
Optimistic about its 10-year strategic plan, TNB says it is on track to meet these concrete goals. In doing so, the Malaysian firm hopes to realise its potential and become one of the top 10 utility companies in the world.
Moving up 17 spots from 39th place in 2016, TNB is now acknowledged as one of the fastest growing brands in the sector, being ranked 22nd by Brand Finance Global Top 50 Utilities 2018 with a brand value of $1.64bn.
On top of this, Chief Strategy Officer, Megat Jalaluddin Megat Hassan, predicts that the firm will increase its earnings before interest and tax by 30% in the next three to five years.
“It is hoped that TNB can achieve or even surpass the target and aspiration outlined in the strategy towards becoming one of the top 10 utility companies in the world,” he notes. “This includes becoming the ASEAN leader in renewables, building profitable businesses in South Asia, Southeast Asia and the Middle East, the establishment of a robust smart grid that allows for bi-directional energy flow, and an increasingly digitally automated grid.”
Undertaking a mammoth 10-year plan, Tenaga Nasional Berhad is preparing for a new chapter in its journey and it's one which is fully supported by its team of over 35,000 people.
TNB’s Chief Corporate Officer, Datuk Wira Roslan Ab Rahman, highlights that apt communication and an innovative culture was critical to prepare the firm for such mammoth changes.
“To make the staff key drivers of our transformation journey and equip them to be brand ambassadors for TNB, we translated the aspiration and educated staff on the new direction of TNB and their role in bringing the aspiration to life. For this, we conducted numerous engagement sessions with the different levels of staff and continuously monitoring our progress.
“The journey to the top entails a shift towards a more performance-oriented and adaptive culture. We are currently working towards ensuring that this culture is imbibed by the staff and ultimately adopted.”
Beyond its four walls, TNB is also engaging with its peers to revolutionise the sector and create a brighter future for the region. As a result, the Malaysian firm is set to host the Conference of the Electric Power Supply Industry (CEPSI), one of the largest and most prestigious events in the electricity supply industry in the Asia Pacific.
Roslan says: “We look upon CEPSI as one of the vehicles that embodies our aspiration by bringing the topic of ‘Reimagining Utility of the Future’ to the forefront. We’re inviting the world’s best utility players and experts to share, network and highlight our goals and get the conversation going as we look for like-minded partners.”
Yet, whilst outlining this ambitious ‘Reimagining TNB’ strategy, the utility firm hasn’t compromised its ethics and corporate responsibility.
Ethical, sustainable growth
With a desire to create a world that is ‘Better. Brighter’, Azman describes how TNB continuously strives to go beyond what’s expected of it, giving back to stakeholders and playing a meaningful role in the communities it serves.
As part of these efforts, the electric utility firm has implemented a Green Policy which plans to minimise the company’s environmental impact by adopting sustainable practices, developing its green energy business and reducing its carbon footprint through energy-efficient operations.
Empowering local communities, TNB has also contributed to the education and development of Malaysian youths by advocating initiatives such as the PINTAR programme, a not-for-profit that aims to enhance the motivation and success of students from underperforming schools through education. Beyond the classroom, TNB has also nurtured technical training through the support of vocational education programmes through its subsidiary, Integrated Learning Solution (ILSAS).
“As Malaysia’s leading utility company, TNB believes that its value lies not only in providing access to electricity to homes and businesses throughout the country but also in adopting sustainable practices and activities in our operations to improve societal and environmental outcomes,” notes Roslan.
The energy sector is experiencing great change with new trends emerging like the shift in economic power to Asia, technology disruptions, the end of cheap capital and evolving regulatory developments. By capitalising on these trends, TNB aims to unlock new growth areas, win a new generation of customers, realise its global ambitions and unleash greater productivity.
“We believe that these trends will substantially reshape our future, yet present exciting opportunities,” says Roslan.
Moving forward, TNB will continue to serve society by empowering them in different ways. As CEO, Azman notes, “electricity is and remains but one way of empowerment. With developments in technology, such as renewable energy, energy storage, connectivity, data analytics, and the internet of things, we see even more ways of empowering people further.”