Wednesday 27 Sep 2023
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KUALA LUMPUR (May 23): Malaysian electricity users could take a cue from the stabilising coal and gas prices in the first half of 2023 (1H2023) to gauge the trend for electricity tariffs in 2H2023, said Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad.

The minister, who also oversees the electricity sector, however said he has not discussed with the Cabinet as to whether the targeted subsidy for the household or domestic sector will be implemented in 2H2023.

“You can reflect market prices [of coal and gas] to see the trend [of electricity tariffs]. And now the price trend has stabilised from previous years.

“But we have to wait [for the announcement]. I have not discussed it with the Cabinet,” Nik Nazmi said at a press conference after launching the Asean Green Hydrogen Conference 2023 here.

He was responding to questions as to when the government will implement the targeted electricity subsidy for households.

Malaysian electricity tariff surcharge or rebate is adjusted half-yearly on top of the existing base tariff of 30.94 sen/kWh, based on fuel generation prices in the previous six months under the Imbalance Cost Pass-Through (ICPT) mechanism.

The country raised average electricity tariff surcharge for medium- and high-voltage commercial and industrial users to 20 sen/kWh in 1H2023, as coal and gas prices jumped in 2H2022 on demand shock post-pandemic, coupled with concerns surrounding Russian gas supply.

That surcharge is after discounting seven sen/kWh from the actual adjustment needed. A 3.7 sen/kWh surcharge was imposed on other commercial and industrial users, while domestic users (households) were given a rebate of two sen/kWh regardless of usage or income.

This year, prices of coal, which contributes about half of Peninsular Malaysia’s electricity generation fuel, have more than halved from the 2022 peak. Similarly, Malaysian gas exports prices to Japan, which is a benchmark to local prices, are down 30% in the same period.

At the time of writing, Newcastle coal benchmark traded at US$160 (RM730)/tonne from its September 2022 high of US$372/tonne. Meanwhile, the gas benchmark traded at US$14/mmbtu in March, from US$20/mmbtu in October 2022.

At the press conference, Nik Nazmi reiterated that the steep tariff increase in 1H2023 for certain non-domestic segments was due to a low base as Malaysia had kept tariffs very low in the past.

“We have kept [tariffs] at very, very low levels in the past, that was why the increase was drastic. That is one factor to consider.

“On when we will implement targeted subsidies, the ICPT is [adjusted] every six months. The next period is for 2H2023. We will announce it in the near future,” Nik Nazmi said.

On Monday, Prime Minister Datuk Seri Anwar Ibrahim told the Dewan Rakyat that the T20 income group will no longer receive any subsidies pertaining to electricity.

Distribution of subsidies according to income group will be coordinated through the implementation of Pangkalan Data Utama (Padu) which is expected to be completed by year end, Anwar was reported as saying.

Edited BySurin Murugiah
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