The Monopoly company in Malaysia - Tenaga Nasional Berhad ( TNB )
Tenaga Nasional Berhad is the only company that supply electricity in Malaysia. Until now, Tenaga Nasional Berhad is the only electricity supplier directly to consumer. There are many reasons that why TNB is still standing as a monopoly in Malaysia. First of all, to run a electricity supplier business, it involves a huge initial investment to build the power plants and purchase raw materials.
Manjung Coal Power Plant
Secondly, even if there are strong companies would have enough capital to build the business, but they still can't enter into the electricity industry. It is because, TNB own the only license that has been given from government. Hence, there are chances for competitors to step into the industry. Logically, just think of it what will happen if there are two electricity supplier in Malaysia? If there are two electricity supplier in Malaysia, they two company will compete with each other with their prices and of course the customer will definitely choose the company that offer lower price. Besides that, there will be increasing of power plant and transmission tower in Malaysia and it brings the destructions to the environment.l The worst is how is the company going to connect the cables to the household which chooses different supplier? Hence, the government only give the license to TNB to maintain healthy market.
Supernormal Profit Graph
Tenaga Nasional Berhad in monopoly in Malaysia. Hence, it is a price setter. The company would set their prices at point P or above ATC curve to earn supernormal profit all the time.
Recently, from the press statement that released on 18 April 2013
The 2nd quarter 2013 financial performance was sustained with stable generation costs whereby during the quarter the average coal price was recorded at USD84.7/mt as compared USD84.4/mt recorded during the 1st quarter financial performance 2013.
Comparing the Group’s performance for the first six months period of FY2013 against the corresponding period in FY2012, revenue increased by 3.8% from RM17,322.6 million in 1HFY2012 to RM17,981.0 million for the current period. This is in line with the increase in demand of 4.6% in Peninsular Malaysia. However, operating expenses decreased by 5.4% mainly benefitted by lower average coal price.
The average coal price during the 1HFY2013 was recorded at USD84.6/mt as compared to USD109.3/mt in 1HFY2012, reflecting a 22.6% decrease over a period of 12 months. This, coupled with the strengthening of the Ringgit against the USD of 1.1% further enhanced the savings in generation costs during 1HFY2013.
Resources
http://www.tnb.com.my/tnb/application/uploads/quarterlyresults/e2b509b2dcac20c8b7b20c25c2530cec.PDF
http://www.tnb.com.my/
Comparing the Group’s performance for the first six months period of FY2013 against the corresponding period in FY2012, revenue increased by 3.8% from RM17,322.6 million in 1HFY2012 to RM17,981.0 million for the current period. This is in line with the increase in demand of 4.6% in Peninsular Malaysia. However, operating expenses decreased by 5.4% mainly benefitted by lower average coal price.
The average coal price during the 1HFY2013 was recorded at USD84.6/mt as compared to USD109.3/mt in 1HFY2012, reflecting a 22.6% decrease over a period of 12 months. This, coupled with the strengthening of the Ringgit against the USD of 1.1% further enhanced the savings in generation costs during 1HFY2013.
Resources
http://www.tnb.com.my/tnb/application/uploads/quarterlyresults/e2b509b2dcac20c8b7b20c25c2530cec.PDF
http://www.tnb.com.my/
If a new company were to enter the same competition as TNB, what are the barriers the new company will have to face?
ReplyDeleteThe company have to face Licensing problem and high initial investment.
Deleteexplain more on the criteria of monopoly competition. you could add the efficiency of a monopoly based competition. their ability to perform price discrimination. how about their product? Homogeneous or differentiated? does it have a close substitute? You explained the barrier to enter but how about the barrier to exit? the article is not even needed. the information is not suitable and relevant enough. it just an article about cost is lower and their profit is higher. the question is.. so what?
ReplyDeleteMonopoly which means a market structure of which a single firm producing a particular good and services.
DeleteAbout the efficiency of monopoly, there are advantages and disadvantages. The advantages is they perform well to provide goods and services if they are monopoly it is because they do not need to worry about price competition between them and their competitors. Thus, they are be able concentrate on providing quality goods and services. The disadvantages is that they will have lack of incentive to innovate because they are Monopoly
Well, they are the only firm that supply electricity to all household in Peninsular Malaysia. Hence, their product is unique, homogenous and no close substitutes in Peninsular Malaysia.
About barrier to exit, since others competitors can't enter to the market. How do they exit? Tenaga Nasional Berhad will not exit from the market because they are the monopoly and earning supernormal profits. How on earth will a company that give up earning supernormal profits?
Come on man, are you a Malaysian? Im talking about the Monopoly in Malaysia. Tenaga Nasional Berhad is the only firm that supply electricity to all the household in Peninsular Malaysia. So my question to u is. Is there any company that will replace the role that TNB playing right now?
Please comment something that which is logic.
Thanks
Tenaga Nasional Berhad do perform price discrimination.
DeleteThe electricity fees charges are different in these 3 categories.
Category 1: Supply voltage of 132 kV and above
Category 2: Supply voltage from 6.6 kV and below 132 kV
Category 3: Supply voltage below 6.6 kV
For more informations u can visit http://www.tnb.com.my/business/charges-and-penalties/connection-charges.html about the charges.
i want to tell something such as the use of price discrimination of TNB. How can i just say it
ReplyDelete