‘Electricity tariff will not be increased again this year’

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KUCHING: Malaysia will not likely raise electricity tariff again for the rest of the year, according to the Ministry of Energy, Green Technology and Water last week.

As a recap, AmResearch Sdn Bhd (AmResearch) noted that the electricity tariff was last revised in March 2015. Then, the average electricity tariff in Peninsular Malaysia was lowered by 5.8 per cent to 36.28 sen per kilowatt hour (kWh).

Prior to that, Malaysia raised the electricity tariff in January 2014 to an average of 38.53 sen per kWh.

The electricity tariff increase in 2014 was part of the government’s effort to achieve fiscal prudence by reducing total subsidies. The electricity tariff is to be reviewed based on the international gas price every six months.

Cost saving from Imbalance Cost Pass-Through (ICPT) for January to June 2015 period amounts to RM1.08 billion. A back-of-the-envelope calculation suggests that the electricity cost is estimated to be an average 32 sen per kWh currently.

“Hence, the RM20 rebate will continue. Since October 2008, subsidy is provided to residential customers with monthly electricity bills of RM20 or less,” said the research house.

Meanwhile, fuel subsidy and electricity tariff subsidy are estimated to be RM685 million for Sabah and the Federal Territory of Labuan in 2015.

“In terms of contribution to inflation, the electricity and gas components account for 2.88 per cent and 0.46 per cent of total CPI, respectively. Thus, the impact of electricity tariff adjustment to inflation is negligible.

“Elsewhere, we anticipate the RON95 petrol pump price to remain broadly stable in July. The petrol pump price of RON95 could potentially be between unchanged and 5 sen compared to June,” it said.

RON 95 petrol is priced at RM2.05 a litre in June, RON 97 petrol at RM2.35 a litre, and diesel at RM2.05 a litre. On average, the price of Brent crude oil hovered at US$63.85 per barrel for the period spanning from June 1-26. That compares to May’s average of US$65.60 per barrel.

As for June, prices are expected to pick up pace, mostly driven by the increase in petrol pump prices. Inflation rate is likely to advance by 2.3 per cent on year in June, compared to 2.1 per cent in May.