PETALING JAYA: While welcoming the federal government’s decision not to increase electricity tariffs for households and SMEs, the Federation of Malaysian Consumers Associations (Fomca) has urged the government to be careful when increasing it for multinational corporations (MNC) that export their products.
Fomca president Datuk Dr Marimuthu Nadason said this is because not all MNC products are exclusively exported.
“Some of them also market their products locally, so the government must be prudent when increasing tariffs so it does not have a major impact on the public.”
On Wednesday, Prime Minister Datuk Seri Anwar Ibrahim indicated a potential increase in electricity tariffs for MNC that export their products and the withdrawal of subsidies for selected profitable “giant” companies that earn millions of ringgit in profits.
Anwar also said the government will not proceed with earlier suggestions to have a blanket rise in electricity tariffs as this will burden the public.
He said Tenaga Nasional Bhd (TNB) has almost 10 million customers but 10% or one million of them are conglomerates that enjoy more than 50% in electricity subsidy.
Marimuthu said: “While it is understandable that tariffs have to increase due to the high cost of producing electricity, in the interest of transparency, the government should also provide the public with data to show by how much the cost has gone up.
“The fact is that higher tariffs will result in higher costs to manufacturers. If the goods produced by MNC are exclusively for export, then we welcome it.
“But if they are for local consumers as well, then we urge the government to study what it can do to help the public as well as manufacturers. This can be done by ascertaining which major MNC produce goods for local consumption and what can be done to help them keep costs down.”
Marimuthu said the idea of continuously providing subsidies to help everyone is no longer viable. Therefore, the government needs a five to 10-year plan to reduce subsidies while minimising the impact on the people.
He added that the prices of goods and services are certain to go up no matter what the government does as it is a global phenomenon.
“The only thing the government can do is to try and reduce its effects on the public. The people also have a right to know why electricity prices keep going up.
SME Association of Malaysia president Ding Hong Sing said while he understood the need to increase the tariff rates since coal prices have gone up tremendously, he welcomed the government’s decision not to increase electricity tariffs for SMEs, which are just small producers of mainly local products and the backbone of the manufacturing sector.
However, he cautioned that the government should be careful when raising electricity tariffs for MNC as the increase must not be too steep.
He said this is because many SMEs buy their raw materials from MNC as well.
“If the electricity tariffs are increased too much for MNC, they may raise the prices of materials for SMEs, which ultimately will lead to an increase in our prices. This will affect the consumer and defeat efforts made to protect the public from higher prices.
“We can only hope that if major manufacturers need to pass on the increased cost to SMEs, it should be in the region of 1% to 2% so as not to have a major impact on our production.”
Ding said SMEs will do everything in their power to protect consumers from price increases, but it will depend on the cost passed on to them by MNC.
He said at the moment, SMEs remain in the dark on how much more their production cost will increase once the new electricity tariffs come into play.
In March, former energy and natural resources minister Datuk Seri Takiyuddin Hassan told Parliament the increase in coal prices had caused the cost of generating electricity to increase by 45%.
He said with the sharp rise in coal prices in the global market, the actual cost had reached US$105.09 (RM442) per tonne compared with the projected price in 2021 of only US$67.45 per tonne.
As of yesterday, the price of coal was US$259 per tonne.
TNB Fuel Services sources coal from Indonesia, Australia, South Africa and Russia, but Indonesia accounts for approximately 65% of its coal purchases.
