The government has been urged not to raise any tariffs in the next six months, lest Pakatan Harapan's efforts to reduce the cost of living by abolishing the Goods & Services Tax (GST) be in vain.
Commenting on the increase in commercial electricity rates announced last week, PKR vice-president Rafizi Ramli said the move will be counterproductive in trying to get consumer prices down.
“I am concerned the increase in tariff announced will cause businesses to use this excuse not to reduce prices, although Harapan has kept its promise to abolish GST.
“For this reason, from July till December 2018, it is most important to avoid any sort of tariff hike by the federal government, so as to thoroughly study the reaction of businesses and industries to the steps taken by the government to stabilise the price of goods,” he said.
On Friday, Bernama reported Tenaga Nasional Bhd (TNB) saying non-domestic users will have to pay more for their electricity, with the Imbalance Cost Pass-Through (ICPT) surcharge of 1.35 sen per kilowatt per hour (kWh), due to higher fuel and generation costs.
In its filing to Bursa Malaysia, TNB said domestic customers with monthly consumption below 300kWh will not be affected by this ICPT implementation, but for those with monthly consumption above 300kWh, the ICPT surcharge will be funded by Kumpulan Wang Industri Elektrik.
“While I understand the Harapan government is trying its best to ease the people's cost burden by continuing with the surcharge only for non-domestic users, this matter needs to be refined to avoid the rise in tariffs scuttling all Harapan's efforts to control prices.
“Although GST has been abolished and the rise in fuel prices has been abolished, with the rise in electricity tariffs, businesses and industries will use this (as well as the expected Sales and Services Tax starting September) not to lower prices, because they want to 'wait and see',” said Rafizi.
“This will erode public confidence in Harapan's readiness and sincerity in finding ways to help the people, many of whom had voted to change the government with the hope it would help to halt the unnecessary rise in prices.”
Rafizi said having run simulations on the effect of the ICPT adjustment and the abolition of GST on prices, his study shows the ICPT policy will reduce the effect of the GST abolition on prices by up to 50 percent.
“That is why I urge the federal government to review the decision to increase the tariff resulting from the ICPT adjustment to avoid killing off any positive effect from other steps to reduce the price of goods,” he said.
Rafizi said the government can be fair to TNB by allowing it to get electricity supply jobs instead of being bound to the independent power producers (IPP), and to review the latter's contracts with TNB that are detrimental to the national power company.
“I will bring the suggestion to put off the tariff hike to the PKR political bureau tonight so that our leaders can voice the matter in the cabinet,” he said.
Meanwhile, the Federation of Malaysian Manufacturers (FMM) said it is concerned by the electricity surcharge of 1.35sen'kWh.
"The effective increase in electricity cost to the manufacturing sector is estimated to be higher than six per cent in view of the rebate enjoyed in the previous six months.
"The short notification also does not give sufficient time to the industry to adjust, especially exporters, where contract terms would have been agreed upon earlier," it said.
The FMM urged Putrajaya to maintain the electricity tariff due to the many regulatory cost burdens.
Furthermore, the natural gas price has also been increased recently. For industries that use natural gas, the increase in electricity tariff means a double increase in energy costs.
"Alternatively, the ICPT could have been moderated to take into consideration the recent natural gas price increase by removing the rebate without imposing any surcharge," it said.