Following the sharp rise in world fuel prices this year, the Malaysian Government has decided to maintain electricity tariffs for all consumers for the second half of 2022 at the same rate as the first half of the year.
The Ministry of Finance (MOF), in a statement released today, said the decision was taken of June 24 even though the cost of electricity generation had increased.
MOF cited at the beginning of 2021, the price of coal cost about USD80 per metric ton, but by mid-2022, it had reached USD400 per metric ton.
Accordingly, the government will bear the additional cost reflected as a subsidy for electricity supply amounting to RM5.8 billion to benefit all Malaysian consumers and shield consumers against the impact of the corresponding increase in the cost of electricity.
The government will pay the sum of RM5.8 billion to TNB to ensure it’s not affected by the sudden increase in fuel prices for electricity generation. This is in line with the Incentive Based Regulation (IBR) mechanism.
The increase in the cost of electricity generation also results in increases of the working capital requirements of Tenaga Nasional Berhad (TNB). Based on this, the government will also provide a guarantee on TNB’s financing of up to RM6 billion to ensure that TNB’s operation (to generate electricity supply) will not be interrupted for the benefit of ‘Keluarga Malaysia’ (Malaysian Family), in addition to safeguard the sustainability of the country’s energy industry.
