KUALA LUMPUR (Dec 22): The Malaysian Government said Sabah Electricity Sdn Bhd (SESB) is on the verge of insolvency as the company continues to make losses.

Tenaga Nasional Bhd owns 82.75% of SESB, while the Sabah State Government holds the remaining stake. Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said in a statement today the future of SESB will be determined following the Energy, Green Technology and Water Ministry and Finance Ministry's discussion with Tenaga.

"The discussion is crucial, especially since SESB continues to make losses and on the verge of insolvency.

"SESB's current average tariff is 34.52 cents/kwh while cost of energy generation is 56.50 cents/kwh. Hence, the Federal Government has been subsidising SESB's fuel costs, ie primarily diesel, medium fuel oil (MFO) and gas," Ongkili said.

He said the Government has been financing the bulk of SESB's capital expenditure. According to him, the Government had spent RM4.2 billion since 2012 to support SESB's operations.

Ongkili said SESB has been asking for a tariff revision since its last review in 2014. He said it is the Government's duty to ensure the tariff is fair and affordable to consumers.

"We also want to ensure that the tariff revision is reflective of the quality of power delivered," Ongkili said.