KOTA KINABALU: The Federal Cabinet has decided that no electricity tariff hike will be imposed in Sabah, Labuan and Peninsular Malaysia throughout the implementation of the Imbalance Cost Pass-Through (ICPT) mechanism for July to December 31 this year.
The Ministry of Energy, Green Technology and Water (KeTTHA) in announcing this yesterday, said the Cabinet had decided on Wednesday that a rebate of 2.25 sen/kWj be given to consumers in the Peninsular throughout the period.
Meanwhile for Sabah and Labuan, which were not included in the mechanism, the Federal Government will continue with its fuel subsidy and electricity tariff subsidy, at an estimated total cost of RM685 million.
This will effectively retain the tariff reduction of 1.20 sen/kWj for all consumer categories in Sabah and Labuan, with the exception of domestic users with consumption of 300/kWj and below who were not affected by the last tariff increase introduced on January 1 this year.
The subsidy would not affect Sabah Electricity Sdn Bhd’s (SESB) operation and finance, said the ministry in a statement.
“The federal government is very sensitive and continuously working to ensure the electricity tariff is appropriate. Determining the right tariff rate based on efficiency and effective cost is important towards ensuring the people’s well-being and living quality, while at the same time supporting the country’s economic progress,” it stated further.
The ministry added that it will continue to monitor fuel prices and other aspects affecting the cost of electricity until a tariff review is implemented in January next year.
Under the ICPT mechanism, the prices of piped natural gas (PNG) in Peninsular Malaysia will be increased by RM1.50/MMBtu to RM16.70/MMBtu effective July 1.
The increase, which is in line with the national subsidy rationalisation exercise, would not affect the electricity tariff in the peninsula due to offsetting effect of the savings amounting to over RM1.085 billion to be generated from the ICPT mechanism.
This would include RM300 million from the renegotiation of Power Purchase Agreement with giant Independent Power Producers (IPP). This saving will be channeled back to end users, to enable them to enjoy existing tariff rates.
Introduced in the peninsula since January 1, the ICPT Mechanism allows the government to review electricity tariff every six months based on the current prices of PNG, liquid natural gas (LNG), coal, medium fuel oil, distillates and other costs involved in generating electricity.
The mechanism also takes into account other factors such as displaced cost from renewable energy and purchase of electricity from other countries.
The RM1.085 billion savings was also contributed by increasing efficiency of coal-fired power plants and the increased usage of coal, which is relatively cheaper compared to PNG and LNG.
For Sarawak, electricity supply and tariff does not come under the jurisdiction of KeTTHA.