Time to slash power supply rates, Guan Eng tells Putrajaya after oil price slump

KUALA LUMPUR, Jan 18 — Putrajaya should instruct state-owned Tenaga Nasional Bhd (TNB) to reduce its electricity tariffs in tandem with the drop in global oil prices, Lim Guan Eng said today.

The Penang Chief Minister said instead of ordering the private sector to reduce prices due to lower fuel costs, the federal government should first “show leadership by example” by slashing power supply rates to consumers nationwide.

“Since the generation or purchase of power is related to the oil price, the drop by more than 50 per cent from US$105-110 (RM373.67-RM391.46) per barrel to less than US$50 per barrel, should also similarly reduce TNB’s costs,” he said in a statement here.

TNB’s failure to slash rates would “severely undermine” and negate any effort by the government to seek a reduction of the prices of goods and services offered by the private sector, the DAP secretary-general added.

The Najib administration is expected to revise its budget for 2015 soon to take into account the weakening of the ringgit and the drop in global oil prices.

Observers, including former prime minister Tun Dr Mahathir Mohamad, have said the federal government must review previous estimates in the 2015 budget and slash expenditure as the dip in oil prices would drastically affect government revenue.

According to Budget 2015, oil-related revenue, which accounts for nearly 30 per cent of total government revenue, had been calculated on the basis of Malaysian crude oil price being US$110 per barrel in 2014 and US$105 per barrel this year.

From these assumptions, Putrajaya had projected a total income of RM235.2 billion for 2015, and budgeted a total expenditure of RM273.9 billion.

But in early November last year, crude oil prices plunged to as low as US$80 per barrel.

Today, prices have declined by a staggering almost 60 per cent from mid-2014 to trade below US$50 per barrel, and is now forecasted to drop to as low as US$40 (RM140) in the first half of this year.

Earlier today, Gelang Patah MP Lim Kit Siang said in a statement here that Budget 2015 must be revised soon, noting that for every drop of one US dollar per barrel, the Malaysian government is estimated to lose about RM650 million in revenue.