Member industries are wary of the impact of natural gas tariff increase over the next three years, the Federation of Malaysian Manufacturers (FMM) said today.

In a statement, the FMM said their concerns are raised despite welcoming the government’s announcement on natural gas tariff rebates at RM0.40 per mmBtu, for the period beginning from January to June 2017.

“...industries have raised concerns on the impact of possible cumulative gas price increase of 22.6 percent by end of 2019...,” FMM said.

mmBtu stands for one million British Thermal Units (BTU) and used as a unit of measure for natural gas.

FMM further said that the Energy Commission had approved the average base tariffs for the regulatory period beginning Jan 1, 2017 to Dec 31, 2019, whereby the average base natural gas tariff is projected at RM32.74 per mmBtu by 2019 from RM26.71 per mmBtu in January 2017.

“FMM recognises that the Gas Cost Pass-Through (GCPT) mechanism is in place and that the average base tariff, which takes into account the increase in volume of LNG import and foreign exchange fluctuations, would be adjusted according to the GCPT announcement for the relevant period.

“Nevertheless, FMM is hopeful that the government would continue to consider industries competitiveness vis-à-vis regional competitors in the energy subsidy rationalisation and the proposed transition to market price...,” it said.

This is on top of urging the government to continually assess the impact of price reviews against the prevalent economic and market conditions.

On its part, FMM said it would continue to advocate for a fair pricing of natural gas and seek further engagement with the government on the basis of the average base tariff determination for the next three years.