TNB Is Doing Fine, Why Increase Tariff For Companies And Impact Recovery? MCMTC

The Malaysian Consortium of Mid-Tier Companies has appealed to Prime Minister Datuk Seri Anwar Ibrahim for a review of the electricity hike as announced by the Minister of Natural Resources, Environment & Climate Change.

Minister Tuan Nik Nazmi Nik Ahmad, announced an electricity tariff adjustment on the Imbalance Cost Pass-Through (ICPT) from 3.7sen to 20sen for the medium and high voltage users which is a massive 440% increase and not the gradual increase announced by the PM on 15 Dec 2022. The consortium says the big increase has a tremendous impact on the players in the Mid-Tier Corporations.

It argues just like the local SMEs it has also been hit with increased costs in the form of higher minimum wages, shortage of labour, huge raw materials price increases, and bank interest rates hikes. At the same time, the MTCs have incurred additional compliance costs as they worked to counter stiff external global competition, such as from China exporters, who are slashing prices to keep their factories in operation. The consortium is asking for more time to recover and regain strength. 2023 is widely reported to be another challenging year globally.

Pointing to the fact that TNB is operating in a protected environment, there is no other competitor in this captive market and with the first 9- months Financial Year 2022 revealing an EBITDA of RM16.31 billion as compared to RM14.39 billion in the same period last year, indicates a (without ICPT cost recovery) improvement of 43.0% from 40.4% last year. Furthermore: “In spite of the current high fuel price cost environment, the ICPT mechanism under the Incentive Based Regulation (IBR) allows TNB to remain neutral as it allows the Group to pass through any variations in generation cost in the form of rebates or surcharges,” said MTC President Callum Chen.

He further illustrated that the utility giant’s revenue without cost recovery of the Imbalance Cost Pass-Through (ICPT) for the period increased by 6.6% to RM37.95 billion from RM35.59 billion, attributed to the increase in TNB sales of electricity in all sectors.

MTC wants the PM to re-consider the sharp increase to 20sen announced and give some breathing space to the sector to focus on rebuilding the economy and not derail it.

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