1. Home
  2. Insights
  3. Alerts
  4. January 2023

Regulation of electricity supply in Sabah transferred to Sabah Electricity Sdn Bhd

25 January 2023

The Chief Minister of Sabah, Datuk Seri Panglima Hajiji Noor announced on 10 January 2023 that the Sabah State Legislative Assembly had passed the State Energy Commission Bill 2023 and the State Gas Supply Bill 2023 to provide the framework for the transfer of regulatory powers over gas supply in the State of Sabah from the Federal Government to the Sabah State Government.1
 
At the same time, Datuk Hajiji Noor said the transfer of the gas supply regulatory authority was the first phase of the plan to take over the power sector in Sabah, and the second phase, the takeover of the electricity supply and renewable energy regulatory authority from the Federal Government, is expected to take place in April this year.2
 
In a development relating to the second phase, the Federal Government gazetted the following subsidiary legislation that take effect on 19 January 2023: 
  1. The Electricity Supply (Authorization to be a System Operator) (Amendment) Order 2023 (‘P.U.(A) 18/2023’); 

  2. Electricity Supply (Authorization to be a Single Buyer) (Amendment) Order 2023 (‘P.U.(A) 19/2023’); 

  3. Electricity Supply (Authorization to be a System Operator in Sabah) Order 2023 (‘P.U.(A) 20/2023’); 

  4. Electricity Supply (Authorization to be a Single Buyer in Sabah) Order 2023 (‘P.U.(A) 21/2023’); 

  5. Electricity Supply (Authorization to be a System Operator in the Federal Territory of Labuan) Order 2023 (‘P.U.(A) 22/2023’); and 

  6. Electricity Supply (Authorization to be a Single Buyer in the Federal Territory of Labuan) Order 2023 (‘P.U.(A) 23/2023’). 
P.U.(A) 18/2023 amends the Electricity Supply (Authorization to be a System Operator) Order 2016 (P.U. (A) 258/2016) by restricting the role of the Senior General Manager of the Department of System Operations, Transmission Division, Tenaga Nasional Berhad (‘TNB’) as a System Operator3 under the Electricity Supply Act 1990 (‘ESA’) to Peninsular Malaysia. P.U.(A) 19/2023 amends the Electricity Supply (Authorization to be a Single Buyer) Order 2016 (P.U. (A) 259/2016) by restricting the role of the Senior General Manager of the Department of Single Buyer, Regulatory Economic and Planning Division, TNB as a Single Buyer4 under the ESA to Peninsular Malaysia.
 
P.U.(A) 20/2023 and P.U.(A) 22/2023 authorise the General Manager of the Department of System Operator, Asset Management Division, Sabah Electricity Sdn Bhd (‘SESB’) to be a System Operator under the ESA in Sabah and the Federal Territory of Labuan (‘Labuan’) respectively.
 
P.U.(A) 21/2023 and P.U.(A) 23/2023 authorise the General Manager of the Department of Single Buyer, Asset Management Division, SESB to be a Single Buyer in Sabah and Labuan respectively.
 
It is pertinent to note that the abovementioned subsidiary legislation is arguably a formality. SESB is the sole electric utility company in Sabah, and already acts as the Single Buyer and System Operator in Sabah and Labuan.
 
The authorisation of the Department of System Operator and the Department of Single Buyer of SESB as System Operator and Single Buyer respectively under the relevant subsidiary legislation referred to above do not necessarily complete the transfer of the regulation of the electricity supply sector in Sabah and Labuan to the Sabah State Government as SESB is 80% owned by TNB and 20% by the Sabah State Government5. It appears that there is a need for TNB to transfer the ownership of its shares in SESB to the Sabah State Government in order for the latter to assume full control of the regulatory power over electricity supply under the ESA in Sabah and Labuan.
 
Further action is required for the Federal Government to transfer the regulatory powers under the Renewable Energy Act 2011 to the Sabah State Government to complete the second phase announced by the Chief Minister of Sabah on 10 January 2023.
 
Alert by Richard Khoo (Partner) and Rachel Chiah (Senior Associate) of the Project & Infrastructure and Energy Practice of Skrine.
 
 
1 Our Alert on the transfer of the regulatory powers for gas supply in Sabah to the Sabah State Government can be read here.
3 “System Operator” is defined under the ESA as any person or a unit, department or division forming part of a licensee who is authorized by the Minister responsible for matters relating to the supply of electricity, to be responsible for system security, operational planning, dispatch of generating units, real time operation and control of the power system and any other function as may be prescribed.
4 “Single Buyer” is defined under the ESA as any person or a unit, department or division forming part of a licensee who is authorized by the Minister responsible for matters relating to the supply of electricity, to be responsible for the management of procurement of electricity and related services, which includes planning, scheduling, procuring and settlement, and any other function as may be prescribed.
5 Based on information on SESB’s website, visited on 25 January 2023.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

  • Proud to be a member of
  • connect with us
  •  
  •