KUALA LUMPUR – Eleven organisations from key commercial and industrial sectors in the country have called on the government to reverse its decision to impose an electricity surcharge and withdraw the policy completely.
In a joint statement today, they said that the up to 15% hike in cost of electricity due to the surcharge (up to 20% hike on off-peak rates) is far too substantial and has to be passed on to consumers.
They warned that this will translate to a higher cost of doing business, further translating into even higher prices due to the “knock-on effect” from raw materials, manufacturing, transportation, cost of holding stocks and so on.
“This will compound further the already high inflationary pressures currently being suffered worldwide,” they said in the statement.
“This multiplier knock-on impact will lead to far higher consumer prices than the electricity surcharge. This new pricing will not adjust downwards when the energy prices retreat and normalise. This will become the new pricing regime.
The statement was signed by the following organisations: Building Management Association of Malaysia (BMAM); Bumiputra Retailers Organisation (BRO); Industries Unite (IU); Malaysia REIT Managers Association (MRMA); Malaysia Retail Chain Association (MRCA); Malaysia Retailers Association (MRA); Malaysian Association of Film Exhibitors (Mafe); Malaysian Association of Theme Parks & Family Attractions (Matfa); Restaurant and Bistro Owners Association (PPRB); Malaysia Shopping Malls Association (PPK Malaysia); and Real Estate and Housing Developers Association (Rehda).
Their statement today follows their appeal to the government last month to reconsider its decision to impose a roughly 15% increase in ICPT (Imbalance Cost Pass-Through) surcharge, equal to an increase of 1.7 cents per kilowatt-hour (kWh).
According to Tenaga Nasional Bhd (TNB), the ICPT, a mechanism under the Incentive Based Regulation framework, allows TNB as the utility to reflect changes (either increase or reduce) in fuel and other generation-related costs in the electricity tariff every six months in the form of rebates or surcharges.
On January 28, the Energy Commission had announced that the government will impose an electricity tariff surcharge of 3.7 sen kWh for non-domestic users for the period from February to June this year, while maintaining a two sen rebate for domestic users.
In their statement today, the eleven bodies stressed that the surcharge would be a tremendous burden to businesses and consumers alike who are already financially weakened from the after-effects of the pandemic, the lockdowns, Covid-19 standard operating procedures, and so on.
“The lower purchasing power of the consumers will lead to slower trade and volume and will hamper the time for recovery and decrease the chance for revival and survival,” they said.
In order not to further fuel the current inflation – as the hike is due to temporary supply factors – they urged the government to bear the temporary pain instead of passing it on to consumers in the form of the electricity surcharge.
“This will ameliorate and not compound the inflationary pressure with cost of production and cost of living, leading to better chances for consumers, businesses and ultimately the economy to revive and recover,” they said. – The Vibes, March 30, 2022
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