TNB Cost Cutting Measures

TNB Cost Cutting

INSTEAD of trimming its workforce, as was carried out by Telekom Malaysia, Tenaga Nasional Bhd (TNB) decided to initiated a Business Process Re-Engineering by involving a major COST MANAGEMENT exercise to rev up productivity and efficiency levels.

This, if fully implemented, TNB believes that it would result in cost savings of over RM700mil for the first year.

The exercise, which was introduced in January, entailed seven measures that came in tandem with key performance indices (KPIs) for Tenaga's executives.

The measures involved reduction in:

General office expenses by RM100mil;
Insurance premiums by RM30mil; and
Overtime costs by 10% to save RM25mil.

Medical expenses were also contained.

Other measures include minimising theft of electricity as well as transmission and distribution losses; increasing collection and turning around Sabah Electricity Sdn Bhd (SESB), an 80%-owned unit of TNB.

“These initiatives require us to change the way we do things to extract value,’’ TNB chief executive officer Datuk Che Khalib Mohamad Noh said in an e-mailed response to queries from StarBiz.

“As a utility, we have an obligation to our consumers to provide electricity efficiently and this requires us to ensure that technical efficiency is at the optimal price,’’ he said.

Why can't Telekom do the same, instead of resorting to retrenchment exercise? Is it because they had more deadwoods within, that flushing out the deadwoods was an imminent measure to revamp the system? Only Wahid, the new CEO could explain.

I am definitely agreeable with Khalib's initiative as compared with Wahid, unless, Wahid's action is to flush out the deadwood syndrome that had existed in Telekom's management under the previous management.