Energy, Green Technology and Water (KETTHA) Minister Dato’ Seri Maximus Ongkili announced yesterday that come January 1st 2014, electricity tariff will increase for all categories of consumers (domestic, commercial and industrial ) in Peninsula Malaysia, Federal Territories of Labuan and Sabah.
The tariff hike is a New Year gift for all Malaysians by the government due to its purported subsidies rationalisation programme. According to the Minister, the objective is to move towards a market-based mechanism in gas pricing.
I think the tariff hike is untimely and unjustifiable.
The Ministry provided a table with the details of how the tariff hike will impact a total of 6.45 million domestic consumers in Peninsula Malaysia. It was said that, 70% among this group of consumers who use 300 kWh and below will not see any changes to their electricity bill amount.
However, close to 2 million domestic consumers in Peninsular Malaysia will still be hit by an average of 14.8% hike. In fact, among this 2 million consumers, 1.4 million of them pay no more than RM 200 in their monthly bill before. We are talking about a typical ordinary urban middle class family or even, a large family in our rural area. It is obvious to me that these middle class Malaysians families will be further squeezed by the tariff adjustment.
The Ministry gave out some details on domestic consumers for Peninsular Malaysia (which is a small step towards information sharing and transparency) but mysteriously left out the detail implications towards the domestic users in Sabah and Labuan. For the commercial and industrial consumers, it has also not provided a breakdown detail. We want to know how many and to what degree will the Sabahans be impacted by the tariff hike. What about the businesses, especially the Small and Medium Enterprises (SMEs) who are the pillars of a thriving Malaysia economy?
The Ministry must publish more information with breakdown numbers.
Impacts on small businesses
I am deeply concerned about the impact of this tariff hike on small businesses. The sundry shops, coffee shops, barbers and all kinds of small business owners will have to fork out more to keep their shops open. This will also be the case for our SME industries who have to maintain cost-competitive amidst increasingly challenging environment. Average tariff for both commercial and industrial consumers will increase 16.85% . More worryingly, the small businesses in the commercial or industrial categories who consume no more than 200 kWh monthly will have to suffer a 10% hike in the electricity bill. This is grossly unfair and unjustifiable.
While the government claim 4.5 million of domestic consumers will not be impacted by this tariff hike, ask any man and woman on the streets the answer will most definitely be different. As commercial and industrial tariff increase, the cost of doing business will subsequently increase and it is only to be expected that the prices of goods and services will go up across the board. Whether it is a packet of noodles, a simple meal or just a haircut, prices will shoot up. Everyone will feel the pinch.
Renewable Energy Fund
For the purpose to fund the renewable energy (RE), the 1% levy imposed on 2 million domestic consumers on their monthly bill since 1st December 2011 will now be adjusted upward to to 1.6% in tandem with the tariff hike. While we are supportive of genuine efforts to bring more renewable energy into our energy mix, we could not endorse this additional RE fund collection. This is because, thus far, Sustainable Energy Development Authority (SEDA) has yet to deliver concrete results on its policies that look promising on the paper. Glitches in the FiT mechanism are not fixed and many RE permits granted have not been operating.
Finally, we remain cautious towards the government’s intention to implement the Imbalance Cost Past Through (ICPT) mechanism in the power sector. Inevitably, implementing ICPT is paving way to further increases in electricity and gas price in the near future. In the name of subsidy rationalisation, the material wellbeing of common people and small businesses are put to an unacceptable high risk by the Barisan Nasional government.