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Wed, 10 Feb 2010
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 NEWS WITHOUT BORDERS :: Local News |
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Lower power rates soon
by Husna Yusop
PUTRAJAYA (Jan 13, 2009) : Electricity tariff will most likely be reduced soon following the significant drop in the price of oil in the world market, Energy, Water and Communications Minister Datuk Shaziman Abu Mansor said today.
He said the Economic Planning Unit (EPU) will be asked to review the price of gas supplied to the energy sector and submit a report to the ministry and he will propose to the cabinet to review the tariff earlier than the earlier-scheduled date in June.
“The government had decided last year to review the tariff once a year. But since the price of petrol has reduced significantly now, this ministry wants the EPU to review the price of gas supplied to the energy sector.
“We are confident that the price of gas today is lower than that of last year. Therefore, to help boost the economic situation, we can ask the government to revise the tariff downwards earlier without waiting for June,” he told a press conference.
Gas price subsidy was reduced last June and electricity tariff raised in July. The jump in gas price from RM6.40 per mmBTU to RM14.31 per mmBTU was accompanied by a hike in tariff, averaging 24% across the board.
On Monday, International Trade and Industry Minister Tan Sri Muhyiddin Yassin said electricity tariffs should be brought down, now that fuel prices have been reduced, adding discussions will be held to consider a tariff review among those involved such as Petronas, Tenaga Nasional Bhd (TNB) and Shaziman’s ministry.
He was raising the views of manufacturers and chambers of commerce which felt that a reduction in energy supply prices would help lower production cost, especially of energy-intensive factories. In some industries, electricity cost accounts for up to 30% of the production cost.
Federation of Malaysian Manufacturers (FMM) president Datuk Mustafa Mansur was quoted urging the authorities to reduce the tariff immediately as the current rate was affecting their profit margin.
Shaziman said electricity supply is generated 60% by gas, apart from coal and hydro, therefore a lower gas price could result in lower tariff .
He however said could not guarantee it would be lowered back to the last rate unless price of coal drops significantly as well. He said the price of coal recently dropped to USD75 per tonne from between USD120 and USD140 before.
Asked how much the reduction will be and how soon a decision can be made, he said it depends on the report from the EPU. “If they could come up with a report in two or three days time, we can even make a decision next week.”
He said the government has to rely on the EPU’s report because the price of gas is not fixed by the government but based on the agreement between Petronas and Tenaga Nasional Bhd (TNB).
Shaziman also said it was not true that TNB has been making a lot of money.
He said the utility company's return of investment is "very, very small” and that the demand for electricity supply had also declined last year compared to 2007.
“For December 2008, the demand was 12,970 megaWatt compared to 13,031 megaWatt in December 2007.
In November 2008, the demand was 13,350 megaWatt compared to 13,441 in November 2007.
A TNB corporate communications spokesperson said they will wait for the review by EPU and the outcome of the cabinet meeting before coming up with a statement.
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Updated: 07:15PM Tue, 13 Jan 2009
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