Kuala lumpur: The recent surge in fuel costs attributed to the West Asia crisis is projected to have a 'neutral' impact on most Malaysian utility players, thanks to established fuel-cost pass-through mechanisms, as reported by Kenanga Investment Bank Bhd (Kenanga IB).

According to BERNAMA News Agency, Kenanga IB highlighted that rising coal prices might actually benefit utility players. The moving-average price used for reporting often remains higher than the actual application coal cost during such periods, resulting in a net gain, or a positive fuel margin, for the power generation (GenCo) segment. Despite the recent price movements, Kenanga IB does not foresee any immediate material earnings impact, comparing the current situation to the volatility experienced in 2022-2023.

For Gas Malaysia Bhd, the impact of rising gas prices remains minimal due to its 'cost-plus' formula. This approach ensures a stable profit spread based on the Malaysia Reference Price (MRP), shielding it from direct exposure to price volatility. A higher MRP, which trails Brent crude oil by three to six months, impacts non-regulated retail margins calculated as a fixed percentage over the selling price. Kenanga IB predicts a 10% increase in MRP would add RM6 million (1.5%) to its FY2026 net profit forecast of RM406.8 million.

The focus of industry players has now shifted towards the 'New Generation Capacity in Year 2029 to 2031' (NEWGEN26) cycle, aiming for 6,000 to 8,000 megawatts (MW) of new capacity by 2030. The NEWGEN26 tender was announced in late February 2026, with a submission deadline in July 2026. Tenaga Nasional Bhd and Malakoff Corporation Bhd are strong contenders due to their existing land banks, while YTL Power Corporation Bhd is reportedly collaborating with a landowner for new bids. Malakoff has already secured four units of gas turbines and generators for two new 1,400 MW plants, and the six to eight gigawatts (GW) pipeline is deemed sufficient for all major players to participate.