Utility giant Tenaga Nasional Berhad said today its net profit slumped 72.6 percent in the third quarter to RM298.8 million on higher energy costs.

tenaga nasional and electricity price The company said its operating expenses for the quarter increased by 21.2 percent to RM1.0 billion following higher power generation costs from the higher coal and gas prices after the government cut fuel subsidies last month.

"The higher growth in operating expenses was largely due to the large increase in fuel-related expenses incurred in the current quarter," the company said in a statement accompanying the results.

Sales for the quarter rose 7.5 percent to RM6.35 billion from RM5.9 billion a year ago from an increase in sales of electricity in Peninsular Malaysia, it said.

Fourth biggest-listed firm

Tenaga is Malaysia's fourth-biggest listed firm and the country's largest power utility firm.

It generates 55 percent of the total electricity capacity of Peninsular Malaysia's power requirements.

"Concerns over the impact of global energy prices, especially the volatility in coal prices, an increase in independent power producers' capacity payments and inflationary pressure, will continue to pose the main challenges for the group," the company said.

"The group will remain profitable in 2008. However it will be lower than the year before as a direct consequence of the higher operating expenses and lower demand for growth," it said.

Tenaga shares were down 0.6 percent at RM8.05 at the close of the market today.