Due diligence vital before taking over SESB, says Sabah Finance Minister

KOTA KINABALU: Sabah has not committed to taking back the ailing Sabah Electricity Sdn Bhd (SESB) amid financial challenges and baggage hanging over the utility company.

State Finance Minister Datuk Seri Masidi Manjun described the company as a “very expensive baby”, pointing out that the state would consider taking over SESB only if it proved to be advantageous for the Sabah government.

A due diligence on SESB was necessary, he said.

At this point, he added, it was still uncertain whether parent company Tenaga Nasional Berhad (TNB) was willing to sell the company debt-free to the state.

“We will (not) take over that very expensive baby unless we feel that the baby doesn’t cry too often at night, can grow well and be useful to the parents,” he said during a state Finance Ministry dinner here on Friday (Jan 12).

Sabah took back full regulatory authority over its power supply and renewable energy following the passing of three Bills at a special session of the Sabah state assembly on Jan 3.

The assembly unanimously passed the Sabah Energy Commission Enactment 2023 (Amendment 2024) Bill, Electricity Supply Enactment Bill 2024, and Sabah Renewable Energy Enactment Bill 2024 but that did not include the takeover of SESB.

The SESB, previously known as the Sabah Electricity Board, was handed over with its regulatory powers to the Federal Government in 1984.

In handing over the utility agency to the Federal Government, the then-state government under Tan Sri Harris Salleh had hoped for federal funds to improve power generation through larger infrastructure cost funding.

The Federal Government later in 1998 privatised the utility board to TNB, with 83% ownership stake in SESB, with the Sabah government holding the remaining 17%.

Chief Minister Datuk Seri Hajiji Noor had told the state assembly that the Sabah government was considering taking over SESB in principle as the Federal Government will no longer provide subsidies after 2030 as the regulatory control is transferred to the state government.

He said, however, the state government also needed to consider the liabilities and share value of the utility company.

SESB chairman Datuk Seri Wilfred Madius Tangau had after the special state assembly sitting said that SESB was technically bankrupt.

This was considering the power tariff imposed on consumers was much lower at 34 sen per unit compared to the acquisition or generation of power at 43 sen per unit.

He said Putrajaya was providing subsidies to counter those losses, noting that the government granted some RM800mil to SESB in 2022 alone.

“This challenge must be taken into consideration and handled by Sabah in an effort to take over full ownership of SESB.

Tangau said, however, that he was confident this could be achieved if every stakeholder worked together to realise the seven-year SESB Transformation Plan.