Shares in Malaysia's utility giant Tenaga Nasional surged today on speculation that the government will allow the first electricity tariff hikes in eight years.

By mid-afternoon trade shares were up 2.27 percent - 20 sen to RM9 on a high volume of 8.13 million shares.

The government has been under pressure to allow energy prices to rise as Tenaga Nasional has operated under difficult conditions since the 1997 Asian financial crisis which increased its borrowing costs.

Tenaga has not increased its power prices in eight years even though operating costs have risen. It is the country's fourth-biggest company in market capitalization terms.

"It looks almost certain now that Tenaga's wish for a tariff hike will become a reality," a local brokerage dealer told The Edge financial daily.

Studying new structure

Energy, Water and Communications Minister Dr Lim Keng Yaik said yesterday that the government would make a decision on Tenaga's request for higher power prices by January.

"We are studying (the new tariff structure) at the moment," he was quoted as saying by Bernama , while ruling out an immediate electricity tariff hike.

Tenaga has not disclosed the exact amount of its proposed price hike.

"Whatever tariff adjustment is made, we will ensure that they will be at an affordable price," Lim said.

Lim had said previously that the ministry was in a dilemma as it had to juggle consumer concerns and demands from Tenaga, as well as Petronas, the national oil and gas company which supplies gas at subsidised rates to power Tenaga's generators.

An electricity price increase will unpopular with Malaysians, who have objected strenuously to steep fuel price hikes in recent months.