Tenaga Nasional Berhad ($TENAGA)

[Audio Gap] In this segment. And correspondingly, load utilization has accelerated substantially, rising from 845 megawatts in March 2025 to 1,054 megawatts in March 2026, indicating a steady, robust and highly predictable ramp-up of operational capacity. Next. In terms of sales contribution, shopping malls, businesses and accommodation services accounted for 18% of total units sold, while other subsectors contributed 15%. Data centers currently accounted for 6% of our total sales in the first quarter of 2026. And we are honored to have received a partnership -- the partnership and ecosystem collaboration team award at the Data Center Cloud Infrastructure Summit 2026, reinforcing our role as a key enabler of Malaysia's digital and data center ecosystem through our Green Lane pathway initiative. Ladies and gentlemen, turning to our technical performance. Our sustained operational execution throughout the quarter continues to underpin our earnings resilience, providing a robust foundation for the group's overall performance. On generation side, the EAF factor, equivalent plantability factor has improved significantly to 91.4% versus 82% last year, reflecting a stronger plant reliability and operational performance across our generation portfolio. Our network performance continued to remain at a world-class level. Our transmission system minutes remained at 0, demonstrating sustained grid reliability and uninterrupted network performance throughout the quarter. For distribution, the System Average Interruption Duration Index or SAIDI, recorded 11.72 minutes, well within our internal threshold of 47 minutes, reflecting the continued strength and reliability of our distribution network. Overall, the group's strong technical and operational performance continues to reinforce our earnings, operational stability and readiness to support growing electricity demand while advancing the nation's energy transition agenda. So moving on to our recent achievement. We continue to strengthen TNB's renewable energy ecosystem through the new BESS deployment, renewable energy expansion and initiatives supporting long-term system reliability. We successfully completed and commenced operation of the first 100-megawatt 400-megawatt hour BESS Santong project in April 2026. And this marks the first Malaysia's first grid connected full grid forming BESS project and was completed ahead of schedule, demonstrating our execution capabilities while enhancing grid flexibility to support increasing renewable energy penetration and intermittency management. Secondly, our hydro Kenyir hydropower stations PPA has been extended from 14th of September to 31st of August 2030. This extension further strengthens our system reliability, particularly in the Eastern region of Peninsula Malaysia. In addition, under the -- under the CRESS program, we completed the execution of bilateral energy supply contract or BASE with day 1 in March 2026 for 2 major renewable energy projects, centralized solar park and hybrid hydro floating solar projects in Ten. And lastly, 2 CGPP projects, namely Sityakawan Energy and Salarun Patama Energy, in which we hold 30% equity stake has successfully achieved their commercial operation date in March and April 2026, respectively. Overall, this initiative further strengthens renewable energy portfolio and support growing demand for green energy solutions while preserving grid's reliability and energy security. So building on TNB's recent operational and strategic achievement, we continue to strengthen our growth momentum through strategic partnerships across digital infrastructure, smart city development and green mobility. Our collaboration with Telekom Malaysia focuses on accelerating green energy and digital infrastructure solutions, while partnership with PKNS supports sustainable urban development through district cooling system initiative in Salam. Meanwhile, our collaboration with Maybank marks TNB Electron's first partnership with a financial institution, further expanding the EV charging ecosystem and supporting Malaysia's green mobility agenda. And overall, these partnerships reinforce TNB's long-term growth aspirations while supporting Malaysia's or broader energy transition agenda. I will now pass to CFO to provide a detailed overview of the first quarter financial performance. Go ahead, Badrul.

Thank you. Well, I hope most of you have seen our numbers last night. So I've seen some reports. So the rest of you guys waiting 40 days, I've said has me and all smile. So I hope the number is satisfactory. So we do believe that for our first quarter number, we have delivered a stable first quarter profit, which is actually driven by overall improvement of our businesses across all divisions. So that's why you have been able to see year-on-year improvement across revenue, EBITDA as well as core PAT of the company. So if you look at the revenue line, that's increased almost MYR 1.1 billion to MYR 17 billion. This is, of course, as a result of the increase in sale of electricity, as mentioned by Datuk earlier, and volume actually stretched by 7% year-on-year in the first quarter. And this was underpinned by data center demand, which continue to be healthy, growing very fast. Of course, it's a small contribution of our sales still, but it's growing very fast, doubling the energy usage in 1 year and demand now already at 1,000 megawatts already. But most importantly, if you look at the malls and businesses just now, which makes up a larger portion of our revenue continued to grow healthily as well. This is also an indication of the overall growth of the economy. And on top of that, of course, we would not deny the fact that the implementation of mall cost-reflective RP4 tariff has actually pushed the revenue so that we are able to recover all the investments that we are doing. So if we move on to EBITDA, you will see that there is MYR 335 million increase, equivalent to 6.5% to MYR 5.5 billion. So to us, this is important, and we're tracking this very close group because this reflects improved efficiency of the company. So EBITDA margin last year was [indiscernible]. Now it's gone up to 34%. So this is something that is very close to the management, where we need to make sure that costs continue to be contained despite scale-up delivery of the CapEx, which is much higher last year than this year. So this additional revenue, together with a much more efficient cost control, have enabled us to deliver the adjusted group PAT, adjusted for ForEx and [indiscernible] of [ MYR 242.5 ] billion, so that is a 6.5% increase. And to us, this is a reflection of the fact that most of these earnings are underpinned by the stability of our regulated business. So all in all, I hope you have seen that we have a good start to the year, and we will continue to focus on delivery this year together with prudent financial management to deliver the expected financial performance for this year. So moving along, if you look at into capital management of the company, you should have been able to see as well that we are recording a much lower receivable. And actually, we are taking a lot of time to make sure that we deploy capital proactively, but of course, trying to source the most efficient cost of funding as well. So this investment are obviously needed for us to continue growing, but gearing is a major source of this funding. So if you look at our trade receivables, compared to March last year, despite a much higher revenue is actually lower at MYR 4.1 billion against MYR 4.4 billion that we recorded last year. So this is important because you have seen that this is the success of [indiscernible] framework, which continue to drive collection efficiencies and obviously, giving us a much lower receivable collection as well. So obviously, as far as trend is concerned, we are continuing to be very stable below 30 days collection period. and that is a major focus for us as well this year. If you look into the second parameter on regulatory receivables as of December last year, we had MYR 1.9 billion receivable. That has gone significantly down to MYR 0.7 billion only as of March 2026. So during the year, we actually received MYR 1.3 billion, which is part of the CPT payment for April to June last year. So if you will recall, RP4 implemented started from January, but we were still on the previous tariff up until June. So these are the difference that has been recovered through ICPT. So this is obviously a very important payment for us because not only as we wanted to reduce the receivables. This is also a reflection of the fact that government continue to honor what is the framework of the IPR. So whatever that is due to TNB, is recovered through [indiscernible] funds accordingly. So this should give you more confidence that the framework continues to be honored by government. So if we move to the third pillar on strategic fundraising and disciplined capital allocation, you would notice that in 2025, we actually reduced our cash holding and paid down a lot of debt to strengthen our balance sheet in 2025. But we know and acknowledge the fact that there is massive investment that needs to be made in '26 and '27. So this year, we are embarking on a lot of fundraising, but we want to make sure that we deploy this capital properly, but this is important for us to sign both regulated and nonregulated CapEx to fuel the growth of the company going forward. So, so far, the first issuance, we actually did third issuance of Genco, IMTN, [indiscernible] program, which was a MYR 10 billion program. We issued another MYR 1.5 billion in March, tenure between 10 to 25 years, and we have been able to sustain quite a good uptake from the investors. So this was actually corporate Sukuk at Genco level. but it's being used exclusively for our Nenggiri Hydro Project as well as [indliscernible] hydro life extension project. So it is [indiscernible] and all the level that is needed for SRI. So that was quite successful. And in the second program, we had our TNB renewable, which issued another 1.05 billion ASEAN Green SRI Sukuk Wakala This is to fund our LSS 5 development. So with the project being actually pure green Suku, and offtake against TNB's long-term PPA, we actually issued multiple tranches of serial maturity from 3, 4, 5 all the way up to 19 years. So we got a very good take-up as well. This is a project financing at the project level rated AA without TNB's corporate guarantee, but we actually delivered the funding cost, which is equivalent to AAA of the TNB's mated category. So this is because we really got a very good demand, and we have been able to push everybody into a much lower, tighter margin under a book building process. So with that 2 programs already done, you would notice as well in April, we established an idle IMTM Sukuk program of MYR 10 billion. This would be to finance at TNB's regulated business for this year and next year. So we are targeting the first issuance of around MYR 4 billion, which will be over the next few days. So we do foresee a good tick up as well. And we believe that this is a reflection of the fact that as far as CapEx requirements are concerned, we have a very good demand from the market, the depth of the capital market is there. And despite a little bit of geopolitical tension everywhere else in the world, we still have our favorable condition for fundraising this year, and we should be able to optimize our cost of debt further. So on that note, as far as the cost of debt for the company, 2025 was 4.63%. So because of the lower cost of borrowing that we have raised over the last 3 months or so, that has gone down slightly to 4.62%. This is, of course, despite the fact that, of course, 95% of our debt are actually fixed rate. So for us, you will see much higher -- improved higher level of gearing this year, but these are all funding required to execute our capital for growth, either RAB or [indiscernible] business on the generation side. So if we dive in further into our CapEx program for the year, yes, as far as the group is concerned, regulated is MYR 2.5 billion, but there is also MYR 0.8 billion that we have already deployed for our nonregulated CapEx, given a total of MYR 3.3 billion. For regulated CapEx, yes, that's actually spread out across the normal 3 pillars. A lot of it is going to security of supply. Demand growth as well as actually, the same amount with a little bit more going to energy transition. So yes, even in the last quarter, we talked about the split between base and contingent CapEx, but I think as we guided earlier, for us, now it doesn't really matter anymore whether it's based on contingent both carry the same impact on the P&L as far as the recognition of the income where the base tariff is recovered -- base caps recovered through the base tariff and the contingent CapEx will be recovered either through [indiscernible] through RP5 in the future, but with time value of money. So we should be in difference in that sense. So if you talk about what we have done this year, obviously, we are optimizing the reliability of the system. So some of the projects that we have delivered in the first quarter includes the PMU 500 kV [indiscernible] West, which is around 29% completed already. That's key to deliver some of the supply to our data center. For ECRL feeder station, 10 of them, we are already on testing stage. Smart meter, which is a key component of us to enable TOU for all the consumers, that is continued to progress quite healthily. We installed close to 200,000 already this year, a target close to 1 million for the full year. That brings total cumulative to date of already 5.8 million of smart meters [ and able ] consumers. That's more than half of our consumer base today. So that Sam talked about just now about our very good system minutes as well as 5 minutes. That's continued to be enabled by continuous investment into distribution automation, which is key to us to enable continuous uninterrupted supply to the consumers. So that's already been deployed in 800 substation today this year. And cumulatively, we have installed to more than [ 10,000 ] of our substations nationwide. So that's obviously all regulated CapEx, which continued to be on track expert our earlier guidance last year that we spent MYR 12 billion CapEx in regulated CapEx for 2025, and we guided for MYR 12 billion to MYR 13 billion numbers for 2026. So we are on track to deliver that. For nonregulated CapEx, this is 2 main projects that we are currently doing. Nenggiri project, which is a match already 73% completed and is on track to COD by second quarter next year. And the other one, Sungai Perak hydro life extension project, where key refurbishment enhancement activities ongoing, and we expect the first unit to -- at Chenderoh to start operating by fourth quarter this year. So that is a 3, 4 years program, where we are progressively refurbishment and replacing the units across Sungai Perak, and they will progressively coming into operation over the next 3, 4 years under a new PPA. So overall, I think this is a reflection of the fact that, yes, last year, we scaled up our CapEx from 2024 [indiscernible] at MYR 9 billion to MYR 12 billion, and we continue to deliver on that momentum. So yes, there is a much stricter required process for us to get the contingent CapEx approved, but that continues to be our focus. And once approval is there, we should be able to deliver the CapEx deployment as planned for the year. So that should continue to sustain the earnings of the company for 2026. So with that, I'll pass back to Dato Sham to cover a bit of the outlook and forward guidance for the company. Thank you.

So ladies and gentlemen, moving forward, we remain highly encouraged by the positive demand outlook and we'll continue to execute our strategic priorities with absolute discipline and focus. We have revised our electricity demand growth projection upward between 4.5% to 5.5%, in line with Malaysia's projected GDP growth of between 4% to 5%. In tandem with this growth trajectory, we are maintaining our group CapEx guidance of around MYR 18 billion for the year with approximately MYR 13 billion allocated to the regulated business and MYR 5 billion to the nonregulated business. These investments remain aligned with the national priorities to strengthen grid resilience, support rising electricity demand and accelerate Malaysia's energy transition agenda. As we continue to expand and modernize our infrastructure, our focus remains on delivering projects that create long-term value and sustainable returns. We will continue to uphold a prudent capital management and optimize our capital structure through disciplined funding strategies. To our shareholders, we remain committed in honoring our dividend policy while remaining steadfast in delivering long-term shareholder value aligned with the group's performance and financial position. Ultimately, our priority is to ensure sustainable business growth while supporting Malaysia's NETR aspiration and strengthening TNB's position as a leading provider of sustainable energy solutions. I'm also pleased to share that we have published TNB's sustainability statement within the integrated annual report 2025, highlighting the group's continued progress, commitments and achievements across our ESG agenda. With that, I will conclude my presentation. Thank you for your attention. So Azim, pass it back to you.

Thank you, Dato Sham and Mr. Badrul for your presentations. And just want to inform that we have 87 Webex participants in our Webex. And now let us now move to the Q&A session. We will begin by taking questions from the attendees here in the room, followed by those joining us on Webex. With that, I open the floor for questions. Please feel free to raise your hand and our staff will pass the microphone to you so you can ask your questions. Kindly introduce yourself and share your questions.

This is Dharmi from CGS. I have two questions. First, on the Genco business. it was a very good set of numbers. Congratulations on that. Could you please help articulate as to what drove that significant improvement? I do notice your efficiencies have improved in terms of operational numbers, but is this sustainable going forward? Secondly, on your fuel margins, it was negative this quarter, which seemed a little odd. Could you help us understand considering we are in a rising coal price environment? And just one more question on data center demand. It continues to move up. Could you perhaps give us an update on the load utilization? Is it tracking in line with the step load that they promised as part of the ESA?

So I'll take number one. Genco's numbers looking really good with availability of 91%. This is in effect quite excellent. I'm coming from the background of been running a coal plant with a 91% numbers. I'm truly happy to see that numbers. This is mainly driven by the excellence O&M process that we have put in place. We look at -- currently, we are embarking on the continuous-b monitoring initiative that monitors the whole plant integrity and reliability. We look at also the continuous maintenance projects and programs that we are doing. And we are looking also in terms of efficiency improvements. We are also looking at how do we make our plant more reliable and also more efficient. And that gives us a good number. This is on top of that, that you see the high number is actually also helped during the session where we lost quite a number of big units in the system. And this is where we actually push our -- all our operating generation fleets to fully maximum load to enable them to actually provide the required power during the unavailability of some of the big gold plants in the system, right? So in fuel margin negative. So ACP is actually -- okay, fuel margin negative, right? You want to take that...

I think we just need to take a step back and figure out actually, the war started actually as of 1st March. So January and February actually was lower coal prices. So that mean. So obviously, we have the weighted average of all our stocks. So during that period, we had a negative margin in January and February, but that kind of stabilized or starting to reverse in March. So at the rate that things are based on current rising prices, we think that the overall by towards the end of the year, that should reverse to a positive fuel margin. So this is just purely a reflection of the first January and February low coal price. And you would recall that even that January, February, that's why we had a rebate of the offer. So that shows how low was the coal prices then. So that's why we had a negative fuel margin. But with now May, you have started to feel, okay, I'm sure all of you are the top 20, which is not protected by the AFA. So 8.5 million of the consumers are protected by AFA. But beyond that, you still feel the surcharge of AFA. So that's already reflected that the rising coal price and the fuel margin will eventually turn positive this year.

Yes. With regards to data center, utilization is increasingly -- is increasing based on the ESA sign. We are seeing that you can see at the -- in terms of utilization, we have increased from 2025 around 710 megawatts, whereas the declared demand is 1,464. And it comes to March, we see the load utilization is at 1,054 megawatt as compared to the declared demand of 1,840, which is 58% load against demand. So we are tracking it very closely. And we believe that the data center load will pick up as planned. The likelihood is actually going to get more aggressive this year and also next year. And there are more -- there are plenty of applications actually coming in now. We had a discussion with me recently where the possible of approval of another 16 data centers of hyperscalers scales that is coming into the system. So the data centers business does provide a good opportunity for us in terms of electricity growth, right?

I have two questions related to Genco. Number one, is it fair to annualize first quarter performance into the full year? Number two, -- in terms of stock in currently that you guys have and also discussions with suppliers, particularly from Indonesia, how does it look like, especially there is potential export ban and Indonesian suppliers or the government making hard to export coal. So I appreciate we can get some more clarity.

So I had a discussion expecting an answer -- a question from you today just now with regards to the Indonesia's potential export. Okay. Let me answer the #1 question first. Is it fair to analyze Q1 results? In my honest opinion of running a power plant for the last 33 years, anything can happen, moving forward for the next quarter, but we will try our best. But once we record such a high performance during the first quarter, what the stations will actually do is actually maintaining that numbers. There will be hiccups here and there. There will be issues here and there. But basically, the stations, the operations people knows what actions need to be taken in order for them to maintain that. We are -- they are trying to maintain for the co plant figures of less than 6% unplanned outage rate and also 4% for the gas turbines and combined cycles. I hope for the best, but certainly, we'll strive hard to actually maintain that sort of performance until the end of the year. So in terms of the coal supply potential as spot band, recently, Indonesian has come up -- Indonesian government has come up with what they call it, managing the export expectations of the Indonesian government. What they do is actually now they are trying to consolidate the whole supply management into one entity that export Indonesian coal to the rest of the world. So basically, you've got multiple coal suppliers that deal with one national entity. They call it BNM. And then this BNM will deal with the rest of the offtaker of the -- we have yet to receive a clear guidelines and policies and how they're going to implement it. So I've asked the team to actually go out and engage with the Indonesian governments, ESDM, Minerva and the Indonesian authorities, what will be their concrete procedures and plan in order for them to manage and handle this moving forward. In terms of coal supply to Malaysia, shouldn't be worried because we have a long-term contract with all our coal suppliers. They remain committed and adhere to whatever the contractual obligations that they have currently. So rest assured, no problem. I don't think they pull the similar stand like they did in 2022 between -- in January 2022. The put a stop on coal embargo during that period. This is just a matter of what we call it administrative procedure that they have to in order for them to protect the coal revenue that actually each coal producer is producing in Indonesia. What they do is actually some coal producers are actually not declaring the supposed what they have invoiced and different. So they lost a bit of collections there. So they are trying to streamline and manage that process too. But rest assured, no export ban foreseen for the coming year or next few years.

Hazmy from CLSA. I have a couple of questions, but I'll start with 3 first. Just to piggyback some of the earlier questions on Genco so far for second quarter, are you seeing the similar kind of performance as first quarter? And historically, have you seen -- when was the last time you've seen this kind of like very good performance? Secondly, on the Iran war sort of challenges, any sort of like pressures from the war that you guys are seeing that are worth highlighting? And also especially in terms of like you're deploying more and more sort of like CapEx going into this year and next year as well. Any sort of like issue in procuring some of the long lead items and all that? And also thirdly, just can you share more colors for those data centers who cannot sort of like utilize of the committed kind of utilization that they have sort of like agreed before? What kind of like penalty and all that, that you guys have discussed with them?

Thank you. Kamal, be ready to pick up question #3. Okay. We got Dato Kamal, Chief Retail Officer here to pick up data centers questions here. So in terms of performance second quarter, that is, Dato Sharif is on, but I'm seeing a good performance from the Genco fleet. I have not received any major breakdown to date. And moving forward, there will be a couple of what I call it, a scheduled maintenance being planned, but the surprises I have not seen. And I really hope and pray hard that no surprises will come in for the next year. So we are expecting good numbers also for Genco. And taking into consideration Genco's last year performance, I think this year [Foreign Language] will be a good performance for Genco. We really hope that. On top of that, we are now carrying out quite a number of upgrading and refurbishment work on the all aging Genco such as the life extension plan on the hydros and Sungai Perak, all those things. And we carry out quite a number of major overhauls actually on all our units in the coal plant. I'm hoping that initiative will actually be good results in the few coming months. With regard to Iran war challenges, to date, what we have seen is actually just the increase in terms of the gas price. That is the first impact that we've seen, all right? But in terms of the supply, I think we have enough because we are a very blessed country. We got indigenous gas coming to all our plants from the [indiscernible] field. There are -- we still require to import LNG, a few vessels of energy, but almost 800 -- close to 800 million scf is actually -- or close to 1,000 million scf is actually coming from our indigenous gas. So we are quite protected. It's a subsidized price. In terms of coal, we are quite secured, no problem. In terms of our supply chain management, we don't see any impact of the Iran war to us all the supply chain management to Tenaga. So right now, we have -- we do have some strategic subsidiaries that provide such as cables, switchgears and also some of the electrical equipment required for our development of our distribution and also transmission line. So more or less, what we have scanned around is actually we are quite covered in terms of the supply chain and the impact of the Iran war does not impact us directly. On third question, may I invite Datu Kamal to provide some insight on the decision.

Thank you, Dato. Basically, we are seeing a very positive trend with regards to data center. As you know, data center, the way that they plan their loading is on the stat load, right? So normally, we see that on the first year, the load is not as per what they are supposed to meet. But we have all covered under our ESA, our electricity supply agreement, where we cover whatever declared load that they have not met, there is certain penalties that they have to pay. And we see the new trend, the recent trend of data centers who are already in their second or third year. This is where they ramp up their load. And most of them meet the minimum 75% or 85% declared load and some even surpassed their declared load. So that's why you see from last year, we are talking about year-on-year growth for data center, that's about 12% growth as against the year before. We are all covered, and we are looking at there being a very good paymaster so far, as far as our collection. We have no issues with the data center. And we see that the trend is a positive trend from them. And the new demand that is going to [indiscernible] coming on in, meaning that we are not looking at them stopping coming into the country. But of course, there is going to be more what we call this coordination with MITI and ST and MIDA to make sure that we contain in terms of the growth as per what we want to meet the demand, right? So that's -- we're looking at the positive trend of data center, right?

Just a follow-up on like last three questions. I think just the first one following up on the -- you mentioned 16 hyperscalers data centers are under application. Can you roughly share where is the location roughly? Secondly, in terms of the contingent CapEx time line for approval, how long does it take? If you can give a general sense. And last but not least, just a general comment based on the electricity demand growth that you are seeing right now. How do you see the RP5 CapEx will pan out? Just in general comment.

Okay. As you know, data centers, they will try to locate themselves close to the point of interconnection with regards to fiber as well as water and electricity. So those places that we know in [indiscernible], recently, we are looking them looking into Nilai, which is a new place. And of course, data centers, their motivation is to look at how do they get a lower land cost, right? And definitely, that's one of the motivation factors for those. So currently, we are looking at still the concentration is on the West Coast of Malaysia. And of course, we are looking at some trends that we are now promoting more on the East Coast where we are looking around Kuantan or even call Terengganu, where they do not really meet the latency issue there, which we are quite positive that those are the new location of mostly AI data centers, right? And the one that is the hyperscalers more on the West Coast of Malaysia, where we're looking at the normal place, Cyberjaya, Maranti Park, Nilai, Kulai. And lately, they are moving towards more towards the East Coast of Johabaru, near Pasigudang or Pengerang. So that's where we are looking at the concentration of the data center, right?

And I'll take on the data -- sorry, data center contingent CapEx approval time line. So obviously, the first priority for us as far as the regulators are concerned is to utilize the base CapEx and some of the contingent CapEx project where possible, they also would like us to reprioritize that into the base CapEx. But when it is clear that it has to be under contingent CapEx, then we need to get the approval to make sure that we will be able to recognize that income. So the time line really differs according to the type of deployment. I mean, I can tell you, for example, the smart meter AMI with TOU being a key enabler for RP4, for the [indiscernible] and everything, that is a high priority project. So when we submit that, we get that approval very quickly because it's very clear that it has to be deployed. Government wants that to be deployed, so very fast approval. There are some other projects that helps to strengthen our operation, such as the distribution automation that I mentioned just now. So the scale and location of the deployment matters. So we have to justify where it is being deployed and why it has to be deployed in that location and how it helps the overall delivery of our [indiscernible] under the KPIs. So it really differs according to project. But I think if anything, what we would like to comfort you is the fact that the contingent CapEx contingent CapEx that we expect to implement this year, almost 75% of them has already been approved by now. So it's just a matter of delivery during the year. But of course, 25% still need to be approved, and that's the challenge in the sense that it's already made. I need to get the approval. And after the approval, we need to get it delivered so that we can recognize the income during the year. So that's why we believe it should be on track. We're working very hard to deliver those expectations. So process is different, but we are on track with our guided CapEx for this year.

So with regards to RP5, you're really well ahead of time. While we are still struggling to firm up the proposal, you're already asking how is the CapEx of RP5. So we are actually in the process of actually redefining and collecting all the information required to make the necessary proposal. But looking at the -- looking ahead at the demand, which is increasing, we probably need -- I can't say that what is the actual amount, but a considerable amount of CapEx need to be spent. Probably it's not as big as the RP4 CapEx because they have actually allowed us to gain a lot of many projects to be executed the RP4 program. But still, it will anchor in terms of the system reliability systems taking into account the affordability of the tariff later on. So -- but in terms of the tariff, the tariff is always -- in terms of the network charges, it is always, I would say, 30% of the total tariff structure. So 60% is always coming from fuel. What we are hoping actually, we would like to propose is in managing a very affordable and sustainable tariff while meeting the system's reliability and also strengthening the system moving forward because we see a lot of demand, and this is coming into the system. On top of that, we are also looking at how do we strengthen the grid system because we probably see a lot more RE penetration into the whole system. that requires a lot more grid flexibility in managing intermittency issue. So we are looking at many more batteries, BSS projects coming into the future. That's where we also get excited about the prospect of a new sector in terms of energy that we can actually play in the energy ecosystem, right? Thank you for the question.

Daniel here from Hong. Just to check, the tax for this quarter is relatively high. I want to check the guidance for the full year, is it still maintained at below 25%.

Yes, Daniel, the long-term guidance that this year, we should land full year at around 24% is still intact. Yes, I know this quarter, we are at 30%, but you should look at that against last year when we was 33%. So it's already better, but we did a bit of capital allowance claim has been a bit slow this year for the first quarter. And as far as the incentive is concerned, the claiming process actually requires a bit more fine-tuning. So we just want to make sure that the earnings and the calculations are proper so that we should be able to get what is entitled to us. So in the first quarter, we are being a bit more prudent on the parts of the incentive being claimed. But like I said, full year, tax is obviously once a year effect. So by year-end, we do expect us to hit the 24% as guided earlier.

All right. Second thing is on the CapEx, regular CapEx, MYR 2.5 billion. May I know the breakdown between the contingent and base CapEx?

The MYR 2.5 billion are all regulated CapEx, yes. The contingent CapEx is relatively small for the first quarter at only around MYR 200 million plus. But this is expected because, like I said, the priority is to deploy the base CapEx. So the contingent CapEx is much smaller and will be deployed later. But this is the part that, like I said, for us, it doesn't matter anymore the difference. As long as the full year, we deliver the MYR 13 billion CapEx, we would get the earnings benefit out of that amount.

Can you give a sense -- last year 2025, you guys spent MYR 1.7 billion contingent CapEx. So right, this quarter, you guys have already started to recognize the allowable return on this MYR 1.7 billion CapEx already, is it in your account?

Contingent CapEx. The financing benefit actually comes in, yes, but it comes progressively during the year.

So this quarter, you spent MYR 200 million. Does that mean that next quarter, you will start to recognize the MYR 200 million allowable return as well?

Yes.

So it's -- you only start to recognize when you already spent on the CapEx. So you recognize every quarter basis. Yes.

This is Colin from Macquarie. Just two questions following back on the DC team. So you're saying that on the MITI level, there's still a lot of DC applications coming through. Just thinking from like a supply perspective, like how do you look at the ESAs? Are there still room on that front, keeping in mind on your reserve margin? And then on the other question, also on DC, if there's not enough supply to give out, considering there's a lot of applications, could you potentially look at some of the signed ESAs you ask these offtakers to potentially release some of it of the unused capacity side?

Of course, in terms of planning for DC, we have this, which is checked by the Mary on that with regards to the demand of DC. Certainly, we pace the demand of DC based on what they declare on year-on-year basis. Question #2, whether there are any data centers who are not meeting and they want to offload their declared load, right? Well, normally, we see that the way that this -- you know there's 2 types of data centers in terms of hyperscalers. The one that is co-located, the one that will find tenants. And as far as we are concerned, as long as they meet what they declare, then we are happy to work with them. So long term, with regards to the demand, we are seeing a lot, as Dato CEO mentioned, there's about 16 new data centers already sent in their application to MITI. And certainly, we are working with MITI to see how we meet the demand. And certainly, we are also pushing them towards the RE, basically CRESS. As you know, we have one data center already signed about 1 gig in terms of RE requirement under CRESS. And we are confident that more will come in. And of course, with the AFA in play and all that, that will be more attractive for them to come in and sign there. And also, we're talking to MITI with regards to how the new data center will have to meet up with the requirement of RE as well as being more, what we call this more efficient. right? So these are all the mitigation action that we are talking to MITI to ensure that we do not stifle the growth. But at the same time, we are encouraging more benefit that the country can get from the influx of the data center, right?

This is Isaac from Affin Hwang. Just two questions from me, please. Number one is in terms of the country generation mix. I think we will transit to more gas and RE and less coal in the years ahead, and you are building some new gas plants. So what is the strategy in terms of the procurement of this gas? And is there any room that Tenaga as a group can play when the country demand more maybe imported gas? Is there any business opportunity that you see and you can do. That's number one. Number two is the quick one is on the solar, I mean, your RE plans. With the solar panel prices going up and the cost is on the higher, how is that affecting your -- the profitability of your current RE project? And how should we think about the rates for the future solar facility in Malaysia?

So I think the number one question with regards to the generation mix, yes, through in line with our energy transition, we are not building any more coal plant, but we're building quite a number of gas plants, especially high-efficiency combined cycle gas plants. So opportunity, yes, there is a play where we can actually enter into the gas supply market that we are positioning it well. We are working with our counterparts. We're looking at opportunities, how this -- actually we can play in that gas ecosystem, energy ecosystem. We are looking at the RGTs. We are looking at importing gas also, we are positioning ourselves well. Unfortunately, we have not made any announcement on that, but it should come very soon. How do we position ourselves as a player to the gas market and also an importer of natural gas in the future. that will definitely come.

Sure. As a country, will we be looking at a national gas aggregator or some similar entity to help with the future?

Yes. They have that idea of having a national aggregator in play, and they have identified us in nature frac to become a preferred aggregator for the country since we are the biggest offtaker of gas because of our generation portfolio. So there is a serious discussion ongoing with regards in [indiscernible], how do we position Tenaga as the key because of the experience and leveraging on the offtaker strength that we have currently right now. So how solar panel is getting more solar panel is affecting how the rates and profit to be in the future. I know solar sector profit is becoming very competitive nowadays. But we will play in that market. We got Genco, we got TRE, we got Gparks also on the solar market. And we look into ways how actually we will make Tenaga remains competitive in those business.

This is Max from RHB. Just two very simple questions from me. Maybe number one, can you just tell us how many months of coal inventory do you have at TNB Fuel? Question number two, if you look at the website in terms of your forecasted AFA for August, you see that the surcharge will actually exceed about MYR 0.03. Can I understand that for cabin approval for you to exceed MYR 0.03, do you need to get the approval in the month of July for the actual first surcharge or at this point of time of forecast? And given that assuming ECs, I believe, the high case scenario, if the things continue to escalate and we're going to see high surcharges, do you think there will be a risk to your demand for city given that the government has also mentioned that this sort of energy inflation risk as well?

Okay. Coal inventory, we are hovering between 20 to 30 days. That's our standard inventory levels that all the power stations have to store at any particular power station. That should last for 30 days in consumption. So usually, you see that it's hovering between 20 to 30 days, right, depending on the consumption of power station. When AFA exit MYR 0.03, we are seeing that now the previous one is actually between July last year until April, we are seeing is only on the rebate scheme, right, rebate region, right? But now moving forward, we are seeing a little bit more on the surcharge side. So according to the cabinet paper, anything that is above 10% from the normal tariff, you got to go and ask the approval from the cabinet. That is the instruction given to us. So for now, we have not seen that happening, but any time it's going above 10% of the stipulated tariff, we have to get to see an approval from the cabinet. So whenever you see approximately fluctuating between MYR 0.03 and minus MYR 0.03, no approval is just a simple pass-through to all the consumers that will happen. So when it comes to why is it on the high side, it's actually mainly driven by the high LNG prices that we are importing right now. In terms of debt structure, whenever we consume 1,000 -- in terms of the LNG that we import is actually associated with the Brent index. So now the Brent is actually at close to USD 100 barrel USD 10 per barrel. So right now, the gas price is not associated with the 15% on top of the Tier 2 gas price is associated to the Brent. price. So we are seeing that a little bit of the high side on the gas inflation, but we are still -- whenever there is a pressure to actually import gas, we have requested PETRONAS actually to pump in more indigenous gas to all -- to the energy sector. So that should be able to mitigate the prices moving forward. So high surcharge okay. I guess that should answer your question. Any -- the last one, what is the question? If there is too much there is an impact on the demand, I don't think so, but there's certainly a lot of complaint from the netizens coming up. I've been monitoring the netizens Facebook and Instagram. And they even got a specific group. Please share M. There's a specific group, about 50,000 followers in there. And they discuss everything detail about TNB bills. I'm quite surprised they got time to think about -- discuss about $20 make difference to them. So you want to know about detail, you can always join that group and I get more than what I know outside the Okay.

Maybe we can move to -- so we have question coming from Ian from PNB.

I think just -- I have a few questions. But first, a follow-up to Max's question on AFA representing M. On this, I think what we want to understand, maybe if you can share when it comes to the AFA trajectory, right? I understand right now we don't see the need for the surcharge to be beyond MYR 0.03. But can we understand when it comes to the KWE fund when it comes to subsidizing the MYR 0.03, what's the trigger for the fund to actually subsidized even if it's still below MYR 0.03. So just to understand the structure. And I think secondly, when it comes to -- this is the second question separate from the AFA. So when it comes to the gas and diesel mix generally, so we understand that there have been some concern when it comes to gas supply. But moving forward, we also want to roll out more CCGT and the backup fuel is diesel. So understanding this currently, have we seen any change in terms of saying increasing some diesel mix in certain power plant? And are we seeing this trajectory to be there in the next few months, for instance? And how does this translate to your forecast when it comes to AFA? So that's one. And the second part of this gas and diesel mix for CCGT power plant is that moving forward, do we see a slowing down -- not slowing down, but in terms of capacity downsizing for the upcoming CCGT power plant award as well as coal extension due to this gas and diesel shortages as both fuel are also in the current bottleneck. The third question -- sorry, I'm just going to lap all questions and make sure I read it on chat so that you can refer to it afterwards. So I think the third question is also on DCs, a follow-up to the questions. I think for DC three parts of the question. Number one is we are trying to understand for the current framework of the penalty, if you may share was the framework something that was recently established? And do we see -- do we see frequent moving forward, frequent revision when it comes to this penalty to ensure, okay, if DCs are still not compliant, are we going to -- are we going to be -- are we going to be stricter when it comes to the penalty structure? Secondly, for the DC question is that for the upcoming RE mix, you mentioned that we want DC to be able to have some RE mix in the power mix. But is there a certain percentage as a direction? And if not, this lead to my third question because there has been a lot of debate when it comes to depending on RE for DC for the SEC charges. And I think right now, they are still discussing about options for SEC revision. And one of the issues is that if you want to say, fix the price or if you want to a certain future SEC charges, we can need to know RP5, RP6, RP7 investment kind of base because we want to know for the next 10 to 15 years, what's going to be the appropriate SEC charges. So on this note, have Petra or EC in competition talk to you about kind of trying to forecast the upcoming RP5, RP6, RP7, though I understand you mentioned RP5' still early, but it seems like this mechanism is requiring us to actually see what's going to be the future charges. I think I'm going to stop there. That will be my question.

So AFA trajectory, whenever and when the fund will kick in, is under the purview and jurisdiction of ST. So we do notice that whenever they see actually a surcharge on the high side, ST with the concurrence of Petra do comes in and actually fund to actually absorb a certain portion of the surcharge. That I can guarantee, all right? So what will be the fundamentals of them utilizing the fund that is under the discretion of ST. I cannot comment on that one. In terms of -- question number two, in terms of Indonesian coal supply, right now, we do not foresee any disruptions in terms of logistic supply chain. That's clear. Because 70% of our portfolio of coal is coming from Indonesia, and it's quite close. Indonesia is quite close to Malaysia. So the vessel can come in within a span of 4, 5 days actually and vessel can reach Malaysia. And most of our vessels are actually Malaysian flag vessels. So that we shouldn't be -- we don't foresee any issue in terms of logistics when it comes to exporting coal between Indonesia and Malaysia. We also import coal from Australia. That is coming from Australia. Also not -- will not be disrupted by the current geopolitical issue in Middle East, all right? So number two, I'm rest assured, we are covered in that area. On the gas and diesel mix for CCGT plant, in our opinion, diesel is a big no, no to us because it's very expensive. So we always focus on gas, high-efficient gas turbine combined cycle units that we want to plan our future for -- in order for us to maintain the generation cost in our electrical energy system. Very -- in terms of energy, we do use diesel for our diesel generators, but that is going to be very minimal in nature. Penalty on DC mechanism. What was the last question, [indiscernible], if you the SAE charges. I think there is a deliberation and also very detailed discussion going on between ST Petra and some of the local players, what is the right SAE charges to be charged to the players. I guess, let them be right now, the SAE charges will be decided and certainly it's going to benefit not only the industry, also the players. It's currently being deliberated. They had a discussion yesterday. They had an engagement, I believe, yesterday with regards to the SAE charges. And for now, I may not be able to comment more than what I've said just now. Okay. The new Gen 26, actually, that one is actually in progress. They are now requesting for request for proposal. And hopefully, we'll be [Foreign Language] will be participating in the next new Gen 26 or so tender, okay? All right.

So we have another question from Fung from CIMB. So I will read the question. Noted that the guidance on regulated CapEx remains the same. Just wanted to understand why 1Q '26 regulated CapEx was lower year-on-year? And the second question is if there are any delays to getting approval for the remaining 25% contingent CapEx, any risk you see that regulated CapEx could fall short of MYR 13 billion guidance for this year or you can bring forward base CapEx to still meet the guidance?

Fung, yes, if you look at our CapEx deployed for first quarter '26 at MYR 22.7 billion, it's just slightly -- sorry, MYR 2.5 billion is slightly lower than last year's MYR 2.7 billion. That's obviously, among others, because of the holidays that came in during the first quarter this year. But really, to us, the difference is minimal. So that is really a matter of getting the recognition of the work in progress into our asset register and getting it really registered as regulated asset base. So for us, there's nothing to worry in terms of the quarter-on-quarter difference this year and last year, just a matter of documentations and process. So as far as the remaining approval that we require for contingent CapEx this year, it's -- well, of course, we cannot say for certain that everything will be approved, but we are quite confident that the business case to get there is there. So if you talk about the downside risk of the CapEx this year, I think we are quite sure that as far as the guidance, we committed to MYR 13 billion. But I think, yes, if you're talking about a range, I think last year was MYR 12 billion. This year, definitely, we believe we should hit at least MYR 12 billion. That's why we're pushing for MYR 13 billion, but that's based on the progress and the approval. So I think if you want to be more conservative, then it's the same MYR 12 billion, but we're pushing towards the MYR 13 billion regulated CapEx. But on 1 billion different regulated CapEx, obviously, the earnings impact would be -- will have to be counted in that as well. But to us, it will not be lower than the MYR 12 billion that we delivered last year.

All right. So I think we have one more last question from Webex from Mayank, Morgan Stanley.

Okay. So firstly, thank you for doing this. I think the first question I had was in terms of rooftop solar, what percentage of the grid supply right now comes from rooftop solar? And how much has been the change in the -- well, the supply curve as you have seen more rooftop solar come through? So basically, what I'm asking is average 4 hours over average 4 hours in terms of the spread, have that widened in terms of the variability? And how much is that? If you can kind of give us some sense of what's going on there around grid stability? And the second question was more related to T&D tariff. How much have you seen the increase in T&D tariff that you have booked for this quarter versus last quarter? And if you can give us a guidance of how much will it increase for 2026 over 2025 in absolute T&D tariff?

I think Mayank was asking about how much megawatt actually hook up to the roof solar as compared to how much solar hook up to the grid. Can I confirm that, Mayank?

So I was asking in terms of the actual supply in terms of how much units of rooftop solar are now contributing in terms of supply to the grid.

Mayank, on any normal particular day like today, where we have a maximum demand of around 21 gigawatt, usually, for the period of 4 hours between 11:00 to 3:00, we have around 3.6 gigawatts of solar. Out of which, roughly 1 gigawatt is actually at the grid level that will be the LSS supply connected directly to the grid and around 2.5 gigawatts are actually the -- what we call distribution level rooftop, both at the lower voltage as well as what is the normal commercial and residential rooftop solar. So if you put it into perspective, roughly around 3.5 to 2.5 gigawatt at distribution right -- at fuel mix level, yes. So around 2.5 gigawatt will be out of the 21 gigawatts that we are supplying today. And Mayank, I'm not sure exactly what you were talking about for the T&D tariff for 2026 because you know that the approved base tariff is 45.4 and out of which roughly 11.2% is network tariff. So what we have recorded is actually around 45.7. So the T&D tariff actually does not move much compared to what is approved.

Sorry, I was not unmuted. So the reason for the network tariff was because obviously, you are spending more now on the -- when you're kind of putting the contingent CapEx into the numbers as well. So technically, our network tariff has to be higher this year versus last year, whether it is MYR 0.02 higher or MYR 0.03 higher. I don't know that number. So I was trying to understand where does that fit. And I think on the rooftop solar as well, the 2.5 gigawatt that you kind of said, is that actual supply to the grid or that is the capacity connected to the grid?

Actual supply to the grid, Mayank. Okay. On the network tariff just now, Mayank, yes, this is the part when we -- in the last quarter, we talked about the earnings recognition of the contingent CapEx that the earnings recognition is similar to the base CapEx. However, we have made it clear that the contingent CapEx have not been decided by the government in terms of actual recovery of the cash. So there is 2 possibility, government allowing us to pass that to the tariff or governments paying us the difference through Kui or government bundles that into the next RP5 tariff. If it's bundled into RP5 tariff, it will come with time value of money. But of course, we would rather government pay us now through Kui fund if it's not being passed to the consumer. So at the moment, contingent CapEx is not translated into the tariff increase yet.

All right, Mayank. Thank you, Maya. Ladies and gentlemen, due to the time constraints, that is all time that we have for the Q&A. I would like to thank you for your questions. Now I will pass to Dato Shamsul for his closing remarks.

So thank you very much for all the forward-looking questions. As always, please reach out if you have any questions with regards to anything, Tenaga, our teams are always available and our investors teams ready for any clarifications required. So to summarize today's session, our first quarter performance reflects continued resilience and cost strength of the MP business and the regulated portfolio continues to serve as our primary earnings anchor, providing strong stability and cash flow visibility complemented by our disciplined RP for execution and robust operational performance. We continue to advance our strategic priorities, including strengthening grid resilience, accelerating renewable energy integration and supporting rising electricity demand driven by commercial and data center segments. At the same time, we recorded healthy electricity demand growth, achieved an MSCI ESG rating upgrade to AA for the second consecutive year and continue to strengthen our sustainably agenda and operational execution capabilities. We remain committed to delivering sustainable returns to our shareholders. Our dividend policy remains intact, and we expect to sustain the current trend of dividend payments subject to the group's performance and financial position and supported by continued demand momentum, disciplined CapEx execution and prudent capital management, we remain confident in our ability to deliver sustainable long-term growth moving forward. And looking ahead, our strategic focus remains firmly anchored on driving Malaysia's energy transition while delivering long-term value for our shareholders. Thank you very much, ladies and gentlemen. And that concludes today's session. And I would like to take this opportunity to wish everybody the bless [Foreign Language] to all who are celebrating and made this occasion bring joy, peace and blessings to you and your loved one and have a pleasant day. [Foreign Language]

Thank you, Dato Shamsul. Ladies and gentlemen, we have now come to the end of our session. On behalf of Tenaga National Berhad, we thank you for your participation in today's briefing. For any questions that remain unanswered, rest assured that we will promptly address them following this event. If you require further clarification or inquiries, feel free to contact our Investor Relations officers or e-mail us at [email protected]. To all our attendees, whether present physically or virtually, we appreciate your time and engagement. For those here in person, please join us for a networking refreshment available in the launch area at the back. Thank you once again, and we look forward to seeing you in our future sessions. Take care, and have a wonderful day.