KUALA LUMPUR, Jan 15 — The Malaysian Plastics Manufacturers Association (MPMA) has expressed disappointment with the government’s decision to maintain the Imbalance Cost Pass Through (ICPT) surcharge at 17 sen per kilowatt-hour for the medium and heavy industrial users for the first half of this year.
In a statement today, MPMA president CC Cheah said that the approximately 40 per cent increase in electricity tariff will lead to a net increase of between 2 per cent and 8 per cent in plastics manufacturing costs compared to the previous year.
“We would like to appeal to the government for greater transparency in implementing the ICPT so that it will not benefit only a small group and leave the majority of the industrial users to bear the cost burden,” Cheah said.
The ICPT mechanism, which determines rebates or surcharges based on consumption patterns in half-yearly blocs, is designed aggregate fuel generation costs to users depending on their usage levels.
However, Cheah today asked why the mechanism was being maintained when the fuel cost for electricity generation has dropped significantly in the second half of 2023.
“For example, coal futures price has declined by 32 per cent from the average of US$206.6 (RM960.69) per metric tonne in 1H 2023 to US$141.1 per metric tonne in 2H 2023.
“As a result, the subsidy allocation for 1H 2024 has reduced significantly to RM1.9 billion as compared to RM5.2 billion for 2H 2023,” he said.
He said the savings in subsidy allocation should be utilised to alleviate the financial burden on industrial users, particularly during a challenging period marked by a global economic slowdown.
Cheah said the plastics industry, which was facing challenges in the current economic climate, would benefit significantly from a reduction in electricity costs that would help it remain competitive in the export market.
“Electricity costs, which make up a substantial portion of plastics manufacturing costs ranging from 5 per cent to 20 per cent, significantly impact the industry’s overall operational expenses,” he said.
On December 22, 2023, the Energy Commission said that the ICPT surcharge would be maintained for all non-domestic consumers in the 1H 2024, domestic consumers in Peninsular Malaysia, comprising 85 per cent or seven million households, will remain unaffected by the electricity tariff adjustment during this period.
The government has successfully implemented 19 cycles of ICPT since its introduction in 2015.
