SESB’s dilemma

Published on: Sunday, July 21, 2024

By: Datuk Seri Panglima Wilfred Madius Tangau

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FROM my personal point of view, the predicament SESB finds itself in can be likened to a patient in critical condition. With a generation source capacity reserve margin plummeting below 12 percent, the company teeters on the edge of a power supply crisis.

The reality we are in is that 80pc of Sabah Electricity Supply Industry’s operations are run by Independent Power Producers (IPPs), a matter I have constantly brought to attention to us all. This is a situation that leaves the company in a unwarranted position of dependency and vulnerability.

The principle of operating under Bursa Malaysia’s stringent requirements adds another layer of complexity.

Given that 83pc of SESB is owned by Tenaga Nasional Berhad (TNB), a listed company, SESB must adhere to the regulatory standards and financial expectations set for public companies. This dual pressure from operational and financial fronts creates a unique dilemma for SESB, which often feels like an entity trying to maintain the appearance of health while battling severe underlying ailments.

In our current state, Sabah Electricity Sdn Bhd (SESB) is akin to a patient barely surviving on inadequate medication, constantly begging for financial relief to pay its bills, all while facing harsh criticism from its users. This untenable situation calls for a important reassessment and restructuring of how SESB operates and most importantly in what manner it is supported.

The company must transition from a state of perpetual crisis management to a more stable and self-sufficient operational model.

If SESB were an ICU patient, its prognosis would be catastrophic. Just like an ICU patient requires specialized and intensive treatment, SESB’s current situation necessitates a comparable degree of dedication and expertise. Treating an ICU patient as if they were well is a ticket towards disaster.

In the same way, SESB cannot be managed through general solutions or traditional approaches. The varied nature and severity of its difficulties demand a governance and treatment strategy that acknowledges the company’s urgent situation. This entails implementing approaches tailored to the organization’s individual needs rather than relying on generic, one-size-fits-all solutions.

Just as an ICU patient relies on a team of specialist doctors and medical professionals to provide the required treatment, SESB must also be treated by external experts and consultants with extensive knowledge and experience. These professionals can provide the specialized assistance that SESB requires to heal and thrive.

Now this is where The Energy Commission of Sabah (ECOS) plays a vital role. Initially established with the primary mission to address the electricity woes in Sabah, ECOS directly impacts the future of SESB whether it is successfull or not.

If ECOS unable to do so, the company, SESB, might find itself reverting to old, inefficient practices. Financially, SESB is in a dire state, continually appealing to the federal government for subsidies, amounting to nearly RM1 billion annually. This dependency on federal aid is not sustainable in the long run.

When I was first appointed as the chairman of SESB, one of the first people I met was the former Chairman of TNB, Tan Sri Tajuddin. His observations were indeed eye-opening.

He said that when he had previously visited Sabah, he had noticed that the absence of a unified grid which makes the area unsuitable for commerce.

Everything seemed to work in isolation, which is far from what is required for a reliable and efficient power system. His view was clear. SESB should ideally be operated by a company that is not publicly listed.

At that time the inherent pressures and expectations of being owned by a listed entity like TNB create constraints that are not conducive to SESB’s unique challenges and needs.

TNB’s primary focus as a listed company is to maximize shareholder value, which can conflict with the immediate and pressing needs of SESB in that period and perhaps even until now.

This circumstance draws attention to a crucial error. I daresay that the distinct challenges faced by SESB stems from the fact that the problems we faced since the start were not correctly identified or handled even from the beginning.

The path to recovery for SESB demands a meticulous approach focused on accurate diagnosis, tailored solutions, leveraging external expertise, and embracing sustainable practices.

Let us learn from past failures and amend them, recognizing that the clock is only going to keep on ticking. SESB cannot do it alone. We need the collaboration, support from all stakeholders and even the understanding from the people are crucial.

The views expressed here are the views of the writer and do not necessarily reflect those of the Daily Express.

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