KUALA LUMPUR (Sept 3): Tenaga Nasional Bhd (KL:TENAGA) sees no need to provide any provision for its potential tax liability arising from the court decision involving its tax dispute with the Inland Revenue Board, analysts said.

Tenaga’s view takes into account the “manageable impact on its cash flow”, CIMB Securities said in a note.

The utility group also “sees no risk to its dividends and credit rating”, the research house said.

Tenaga’s claim for reinvestment allowance for manufacturers was dismissed in July by the Federal Court, which instead said the utility group should have made an investment tax allowance claim for utility companies.

In a separate note, MBSB Research said the management has “received favourable response from the Ministry of Finance subsequent to their resubmission for Investment Tax Allowance under Schedule 7B and will continue to engage the ministry”.

Tenaga’s latest results announcement flagged a potential tax exposure of RM10.02 billion, with a corresponding net cash outflow of RM3.8 billion after taking into account the amounts remitted to the IRB for 2006, 2008-2012, 2016, 2017, 2018, 2022 and 2023, MBSB Research said.

“Following advice from its tax and legal advisors on the matter, Tenaga said the amounts are expected to be recovered and no provisions are required at this juncture,” it said.

Tenaga’s net profit slipped to RM1.16 billion in the second quarter from RM1.44 billion a year ago, due to a swing to cost pass-through over-recovery from domestic electricity sales. Revenue rose 17.19% to RM16.84 billion, from RM14.37 billion previously, mainly from sales of electricity.

The utility group has maintained a dividend payout of 25 sen per share for the first half of the year.