PETALING JAYA, Nov 28 — The impending rise in electricity tariff will have an impact on manufacturers, resulting in a double-digit increase in production cost, the Federation of Malaysian Manufacturers (FMM) predicted today.
Its president, Tan Sri Yong Poh Kon, said manufacturers polled for the FMM-MIER Business Conditions Survey indicated that they expected cost of production to increase, taking into account the increase in minimum wages, the raising of the retirement age, and the increase in contributions to the Employees’ Provident Fund (EPF).
“Manufacturers are already expecting some form of energy price increase due to the subsidy rationalisation, so this will impact on not only the gas users, but also the electricity cost,” Yong told reporters after presenting the survey findings here at Wisma FMM.
The survey was conducted in conjunction with the Malaysian Institute of Economic Research (MIER).
“So the minister said the price hike will be between 10 to 20 per cent. Obviously, different industries will be impacted differently, depending upon electricity usage, but there is no doubt the double-digit increase is quite significant, so we’re looking forward to greater details on how this is going to be implemented.”
National news agency Bernama reported yesterday that Malaysians could expect an increase in electricity tariff of 6-7 sen per kilowatt next year.
Minister of Energy, Green Technology and Water Datuk Seri Dr Maximus Ongkili said, however, that the government was still studying the rate, which would likely be between 10 and 20 per cent. He said anything below 20 per cent was reasonable.
Ongkili, MP for Kota Marudu, said the rate would depend on how much the government wanted to reduce subsidies and divert resources to socio-economic development.
It cost the government RM130 million a year in subsidies for the tariff while the rest was borne by Petronas, at about RM8 billion to RM10 billion a year for the power sector.
The matter would be discussed in Cabinet this week, Ongkili said.
Yong said he expected the government to be more transparent in the process of pricing electricity.
“One of the greater detail we are looking forward [to] is further discussion with the government as to the transparency in the pricing process of electricity because gas supplied to independent power producers (IPP) is at a subsidised rate, it is lower than world price and over time, of course it has to move up to minimise the subsidy,” he said.
“But at the same time, while we are using subsidised gas in power generation, nevertheless the final price of electricity for industrial and commercial consumers are quite similar to the prices in Thailand, where they also use gas for power generation and their gas is purchased at market price.
“So we are purchasing gas at a subsidised price ... We ought to expect the final electricity price should be lower than in Thailand but it is not, so this is something that we would like to seek clarification on,” he said.
In yesterday’s report, Ongkili pointed out that power tariffs in Malaysia were still lower than in Thailand and the Philippines, but slightly higher than in Indonesia, which subsidises its power sector the most.
The last increase in electricity tariff was in June 2011, when the subsidised gas price was raised to RM13.70 per million metric British thermal unit (mmbtu) from RM10.70 mmbtu previously.
