Power tariff pass-through could wipe out GST savings, Rafizi warns

Rafizi urged Putrajaya to review its approval for TNB to continue with the scheme until it can accurately gauge business response to the planned tax changes already announced. — Picture by Mukhriz Hazim
Rafizi urged Putrajaya to review its approval for TNB to continue with the scheme until it can accurately gauge business response to the planned tax changes already announced. — Picture by Mukhriz Hazim

KUALA LUMPUR, July 2 — PKR’s Rafizi Ramli urged the government today to reconsider the approval for Tenaga Nasional Bhd (TNB) to maintain the imbalance cost pass-through (ICPT), claiming it will negate consumer savings from the removal of the consumption tax.

The former Pandan MP said that while the ICPT was technically aimed at non-domestic users, he expressed concern that firms may use this to avoid lowering prices following the government’s move to zero-rate the Goods and Services Tax (GST).

Rafizi said the next six months were an especially critical period that could determine public perception of the Pakatan Harapan (PH) government that won the 14th general election in May, and undermine existing efforts to help the public deal with rising costs.

“If the GST is abolished and weekly price hikes are eliminated, but at the same time net power tariffs rise, businesses and industries will use this excuse (along with the Sales and Services Tax in September) to not lower prices and adopt a wait-and-see attitude,” he said in a statement.

“This will also erode public confidence in Pakatan Harapan’s determination and sincerity in finding ways to aid the public who opted to change the government in the hopes of avoiding unwarranted price hikes.”

Rafizi said he conducted simulations based on the announced ICPT rates and said that it would effectively negate 50 per cent of the cost savings resulting from the removal of the GST.

He urged Putrajaya to review its approval for TNB to continue with the scheme until it can accurately gauge business response to the planned tax changes already announced.

Rafizi also suggested that the policy be suspended until PKR is able to communicate its concerns to the Cabinet.

TNB said in a filing with Bursa Malaysia last week that the federal government has approved its continuation of the ICPT until the end of 2018.

The surcharge is applied at a rate of 1.35 sen/kWh on top of the base tariff of 39.45 sen/kWh.

It is applicable to non-domestic users and households that consume above 300kW/h monthly.

The ICPT permits TNB to shift increased energy generation costs to some consumers at a rate that is fixed for a period of six months and reviewed thereafter.

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