Even though it is the only electrical utility in Peninsular Malaysia and the largest publicly listed power company in South-East Asia, Zainal Abidin Shah Mahamood wants to dispense with the notion that TNB is a monopoly.
He’s Managing Director of TNB’s fuel procurement subsidiary, TNB Fuel Services, and his job involves carefully balancing concerns on cost, reliability, security and the environment for TNB, its suppliers and customers. “I’m in a position where I’m committed to the business, to our partners and to the public. I don’t need to tell you that’s a complicated task to execute.”
Speaking with The CEO Magazine, Zainal says procurement is more than just buying from suppliers. The role involves maintaining relationships with business partners and meeting the needs of customers and, he says, a lot of research and analytical thinking.
“It’s our job to ensure TNB has the perfect mix of energies procured. I think people often forget that, but I always want to ask, ‘How do we become more than just commodity buyers?’ If we’re more than just a business that buys things, then we have an advantage and can stand apart from the competition.”
“If we’re more than just a business that buys things, then we have an advantage and can stand apart from the competition.”
That ambition to be more than a procurement business is important because, as the need for new technologies grows, Zainal believes a deep understanding of the industry will allow TNB Fuel to adapt to change more readily.
“Although coal and other fossil fuels are important, we’re not a ‘coal’ company; we’re a procurement company. We’re evaluating the needs of a lot of distinct groups, and that involves a broad understanding of a lot of different markets. Innovative technologies are already emerging as more affordable and popular; we want to be on top of that, and to do that, we’re going to have to be leaders in this industry.”
Know your product
In operation for more than 20 years, TNB Fuel has staked its reputation on procuring energy that is reliable, cost-effective and ethically sound. Buying from countries as diverse as Indonesia, Australia and South Africa, TNB Fuel’s approach of supplying at the lowest possible cost while maintaining quality and reliability leaves it open to pursuing new opportunities and alternative sources.
On a company-wide basis, it upholds the maxim commonly attributed to Mark Twain that “an open mind leaves a chance for someone to drop a worthwhile thought in”.
Procuring for the industry “is a lot more involved than people tend to think”, says Zainal. “There are a lot of industry decisions and networking activities involved that have tested my skill set and given me the opportunity to learn, and engage with and influence people.
There’s so much involved when it comes to preserving relationships and accountability as opposed to a job that just requires paperwork. The outcomes are enormously important to everything we do, and I find that makes it such an exciting industry to work in.”
Trained as a chartered accountant, Zainal was initially appointed COO of TNB Fuel in 2009, serving in that role for five years, before becoming Managing Director in 2014. With a history of experience in business process re-engineering as well as privatisation and internal governance, he was a top candidate to oversee commodity procurement, with his knowledge of markets, experience with finance management and understanding of international trade practices bolstering his approach to TNB’s future.
When he stepped into his new role, Zainal says he was most excited to begin working in a collaborative environment. “I’m someone who likes to work with teams, explore innovative ideas and constantly improve,” he says. “There isn’t much of a chance for that when you’re only working as an accountant because you tend to… I’m not even sure how you would describe what I did when I was an accountant. Looking at credits? Looking at debits?
“I’m someone who likes to work with teams, explore innovative ideas and constantly improve.”
I was just observing elements of a business. Now, as Managing Director, I am involved with those numbers. They have an impact on what I do. I have the opportunity to lead.”
That’s been important to Zainal, whose resistance to settling has meant he has overseen a fundamental shift in the way TNB Fuel conducts business. “When I joined, it was wholly a procurement company. On a basic level, that takes a bit of money and networking. You can buy products anywhere and at any time, which is a bit too simple for me. What I wanted to focus on was differentiating the business beyond procurement.
I wanted to focus on our advisory functions and see where we could help power plants with quality, quantity, timing, delivery and scheduling. I wanted to see what this company could do beyond just obtaining energy.”
In his first days as the Managing Director, he began consulting leadership and employees to try and understand how TNB Fuel could differentiate itself. “I wanted to assess the strengths and weaknesses of this business and get to know the choices that had brought it to where it was.
This was a business that had existed since 1998, and at the time things had largely moved as expected. But the industry was changing and new challenges were presenting themselves.
I had to ask myself, ‘How do I confront that?’ “I began by asking people, ‘What ideas are you focusing on? Are you process focused? Or, are you customer-focused? How does your job tie back to the company’s mission?’ I was trying to understand and interpret how people saw this business and understood its value, and what direction they thought we could head in.
A lot of the people were entrenched in the business and after 20 years of operations they could reasonably call themselves experts. But I wanted them to understand what they could contribute to the company as well as the industry.
“After I had begun to understand how people saw TNB Fuel, I started asking everyone new questions like, ‘How do we rebrand ourselves? How do we go beyond purely buying commodities? Can we provide valued services to our partners?’ What I wanted was TNB Fuel to contribute to the industry on a much bigger scale than it was doing.
I didn’t want this to be a business that only focused on buying. I wanted it to contribute to a broader body of knowledge. I wanted this company to excel beyond the expectations of procurement.”
“I wanted this company to excel beyond the expectations of procurement.”
Zainal decided that if the company was to stand out from its competitors, it would have to diversify its services. Under his direction, TNB Fuel was to begin sharing market intelligence and entering a dialogue that would be mutually beneficial for both suppliers and TNB.
“I wanted to share our technical knowledge, collaborate and investigate problems together with partners. That’s because I saw the company’s mission as going beyond the business of buying and selling coal and thought we could take advantage of what the industry could offer.”
As TNB Fuel began functioning as a consulting business, Zainal says the first thing he did was invest in training for its employees. However, as it came at great expense and results were often not guaranteed, the company encouraged employees to take advisory positions after their training so they could share what they had learned.
“In effect, we were not just offering promotions, lectures or training; we were promising the possibility of being a fully-fledged representative of the company.”
On top of that, he began facilitating networking for the company’s employees, offering them the chance to communicate with clients and customers and develop their own industry knowledge. He says that emphasis on technological learning, as well as extensive benchmarking exercises, will help TNB Fuel set itself apart in the long term and help employees better understand the on-the-ground processes behind procurement. “This is about investing in people, as we believe that they will be the foundation for future successes in the company.”
Because of this new focus, Zainal says TNB Fuel is now more actively engaged in the market, asking questions and assessing situations for the benefit of not just TNB but all its partners and suppliers. “This isn’t just theoretical stuff. We’re performing a service. We’re expected to know what we’re talking about. That’s why, from a business perspective, we always want to know where we can find active and interested partners.”
Investing in shared knowledge is a fundamental aspect of TNB Fuel’s business strategy today, with Zainal pointing out that the company “distinguishes itself from other procurement organisations by collaborating and investing in knowledge work. Because we’ve put in the investment, we know that we can expand beyond basic expectations. We’re a company that rewards knowledge and we can offer that to partners because we’ve built our connections and network with others in the region.”
With TNB Fuel becoming increasingly versatile under Zainal’s direction, the company has been able to better incorporate environmental concerns into its procurement efforts. “We understand our social obligation and can involve ourselves in the mission to conserve energy because we consult widely.
We’re always considering emissions and the environment in this business, asking ourselves, ‘How do we go about implementing best practices to meet the expectations of the government, international regulators and the public?’ Those are the social aspects of procurement.”
TNB itself has launched multiple acquisitions to address its environmental impact and expand its capacity for sustainable energy. In 2016, it acquired 30% of Turkey-based GAMA Enerji, which contributed 117.5 megawatts of wind generation to the company. One year later, it gained a 50% interest in the UK’s Vortex Solar Investments, helping cement TNB’s access to the international renewable energy market.
“The company’s broader awareness of the industry has significantly changed how this business operates,” says Zainal. “It’s allowed us to be more open to green technologies, while giving us access to emerging energy markets.”
Still, as an essential pillar of TNB Fuel’s procurement, coal constitutes more than 50% of its purchased energy, ranking above natural gas as its most used source of energy, far ahead of hydroelectric, renewable, distillate fuel or oil. Zainal says that because coal is accessible, affordable and reliable, it is a natural base load of energy for the Malaysian energy sector. “As far as I’m concerned, it supports our entire operation.”
As concerns over sustainability grow, though, Zainal sees TNB Fuel’s procurement efforts adapting, with alternative energy complementing coal. “I think people become confused and think that there is a stark contrast between coal and renewable sources. That’s just not the case. We want to meet cost demands as well as environmental concerns, and part of that means assisting in the development of innovative technologies and seeing the two support each other.”
Zainal understands the perception that energy companies can appear uncaring of environmental concerns but asserts “that is not reflected in our work”. “I love this planet, and I want to satisfy environmental regulations. But without coal, there would be no ability to support or advance alternative energies. We care about the planet and we want to figure out how to compromise between cost, quality, reliability and cleanliness.
“We care about the planet and we want to figure out how to compromise between cost, reliability, quality and cleanliness.”
Indeed, as Malaysia begins implementing new environmental regulations, TNB has set its sights on developing more than 20% of renewable energy capacity in the generation mix by 2025. With further reforms likely, Zainal says he doesn’t want the business to be left behind. “We see these ambitious reforms to the utility industry and it’s possible that within the next three years our entire business will change,” he says. “We want to be prepared for whatever those reforms bring.”
Zainal says that if TNB Fuel must adapt, the business will be responsive enough to handle it. “We’re going to be active when it comes to sharing how we think regulation should be implemented. That, of course, means we will be willing and ready to reflect and adjust our own functions.”
Despite the challenges that may emerge from new regulations, Zainal sounds an optimistic note about the possibilities. “It’s going to be interesting seeing where new guidelines will take us. Because we’ve developed the relationships we have with our partners and suppliers, though, I believe that we are prepared for any challenge that could arise, and by focusing on productivity and ensuring that this procurement business is cost-effective, we can confidently say we’re prepared for wherever the industry takes us.”
An energised business
Having transformed TNB Fuel’s operations, Zainal hopes that the public will recognise the company is open to embracing modern technologies and renewable energy alternatives. “A lot of people know of us as coal suppliers, but we’re not coal advocates. We know it’s not the cleanest stuff available.
That’s why we’re working with suppliers and partners so closely. We’re concerned about the environment, but if you’re talking about accessing a source of energy that is reliable and fertile, coal is still an important part of our procurement efforts.”
Without coal, Malaysia wouldn’t be able to implement or develop renewable technologies, which Zainal says will be a continuing focus for the business. “We want to work on a complementary relationship for innovative technologies so we can eventually move more aggressively towards using green technologies.”
Until then, Zainal commits TNB Fuel to working only with partners that can prove they’re engaging in ethical and sustainably sound conduct. “There is no need to dirty our environment. We understand that if we want the best results, we must act responsibly.”
Zainal says that TNB Fuel acts as a cooperative, knowledge-based procurement company, sourcing the most inexpensive and reliable alternatives, so its customers will always be his fundamental objective. “It’s a constant process of trying to figure out what our base load will look like and how to factor that into the development of innovative technologies,” he explains.
“We’re looking beyond coal to other minerals, and we’re consulting with our partners to see how we can deliver the best and most efficient energy to them. I hope that our customers will appreciate that we are doing what we can to go beyond procuring and be involved in the discussion around better and cheaper technologies.”