While homeowners breathe a sigh of relief with the announcement by the Prime Minister that there will be no hike in tariff for electricity for the next 2 years, there is another of the community that isn’t that pleased.
It’s not because they don’t appreciate the news but the press statement issued by the Energy Commission says commercial properties will have to pay a surcharge of 3.7sen kw/j which the PM failed to mention. In the statement, the EC states all domestic users will be exempted from the hike but not for commercial and industries, this comes from the Imbalance Cost Pass Through (ICPT) a mechanism that will be reviewed every six months.
Under the mechanism, the commission added that the price of raw material and electricity generation overall has increased by RM1.67 billion, in fact, coal the main component for power plants in Peninsula has jumped to US$200 per ton, hence the need for the surcharge.
In keeping with the theme ‘Keluarga Malaysia,’ the Government rightly decided against the tariff hike for the people especially during these difficult times who multiple whammies of pandemic and flooding. It’s not the right time to burden the people any more than what they have endured. But the fact is so is the economy which is just now starting to see some green shoots. And the economy can only recover if the playing field is made conducive and encouraging.
With the ‘surcharge’ small and micro businesses will be hampered yet again, some of these operations rely heavily on power consumption to the extent some exceed 50% of their cost.
SME Association Malaysian said for most SMEs, especially those in the manufacturing sector, electricity is the second or third largest cost factor, behind raw materials and labour costs. A hike of 18.4 percent in utility bills for a business that’s running at a sub-10 percent margin could mean a reduction of between 20 to 40 of its profit, and could even mean a difference between making and losing money.
The move by EC will ultimately result in 1.6 million commercial and industrial users paying between 11.8 to 18.4 percent more for electricity from 1 February 2022. This could result in a trickle effect, where the owners could pass the increase down the supply chain and reach the public. This will defeat the whole purpose of not burdening the public mantra and not to mention Malaysia is already bracing for an unprecedented inflation rate in the coming months.
The Association President added that “while we can understand the need for periodic adjustments in prices, we cannot accept the quantum or the timing of it, especially since Tenaga Nasional reported a 9.6 percent and 4.6 percent jump in revenue”.
Perhaps the EC and the Government should relook at the quantum and find a middle ground on appeasing all parties.
Undoubtedly commodity price is shooting up and the cost of operation is rising, but to safeguard one profit-making company (TNB) over the millions of small businesses which are just starting to stand up after kneeling for 2 years is on itself unbalanced.
