Power is a very important element in the factors of production for an industrialised nation like Malaysia. It will define the competitiveness of produce by Malaysia, since other factors of production like wages inevitably have to be increased due to the corresponding cost of living. The cost for power is heavily dependent on the cost of energy, since 77% of power generation in this country is based on hydrocarbon.
45% of power generation is based from gas powered power producers.
The Federal Government is expected to approve the tariff adjustment by TNB from 2014, based on the revision of cost of natural gas charged to the power producers. At present day, the cost of natural gas passed to power generators is more than 65% lesser than the market price.
19 August 2013| last updated at 06:47PM
TNB: Tariff adjustment will not burden consumers
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KUALA LUMPUR: Tenaga Nasional Berhad (TNB) has given assurance that the proposed electricity tariff adjustment, if approved by the government, will not burden consumers.
In fact, TNB president and chief executive officer, Datuk Seri Ir Azman Mohd, said domestic users who consumed less than 200 kWh a month would not see any increase in their monthly bill due to the tariff adjustment.
“About half of our eight million consumers are those who consume less than 200 kWh and have a monthly bill of less than RM70. They will not see any increase in their bills and will not be burdened.
“However, if the tariff adjustment is approved, it will be reasonable…the people need not to worry, it will not be a double or a triple increase…there is a certain percentage, but it will not be that high,” he told reporters at the TNB Aidilfitri do here today.
Also present was TNB chairman Tan Sri Leo Moggie.
Azman said the final decision on the new tariff would be made by the government based on inputs and information given by TNB.
“…many meetings have been convened to discuss the matter,
“We are confident that the government will give its fair considerations to all quarters, including consumers and the industry players,” he said.
Azman said electricity tariff adjustment, should it be made in the future, was due to the hike in the price of fuel, and not to increase TNB’s profit.
“TNB is neutral, we have nothing to lose, the company that is suffering losses now is Petronas as it has to pay such a high price to supply liquefied natural gas (LNG) as fuel,” he said.
Azman said currently, Petronas fixed the price of gas to generate electricity at RM13.70 per MMBtu, a rate much lower than the market price of RM40 per MMBtu. — BERNAMA
The current natural gas priced charged by Petronas is RM13.70 per MMBtu. It has been revised from RM10.70 per MMBtu even though the current market price is RM40.00 per MMBtu. The current tariff is also calculated based on the coal price of USD85.00 per toned (CIF). Coal powered generators contribute slightly lesser than 20% of power generation.
The current progressive incremented tariff for homes and dwellings:
Tariff RatesPrint this page
“Domestic Consumer” means a consumer occupying a private dwelling, which is not used as a hotel, boarding house or used for the purpose of carrying out any form of business, trade, professional activities or services.
Minister-in-charge of Federal Government key performance indicators Dato’ Seri Idris Jala explained in his blog posting that the burden of cost is translated in our everyday lives in one form or another. This include cost of energy and power generation.
“If subsidies to independent power producers and oil companies are removed, then we don’t need to increase petrol and diesel prices. Right? No, wrong – simply because we don’t give subsidies to them.
The notion that if subsidies for corporations are removed then we can continue to subsidise the public, is not just a mere over-simplification of subsidy rationalisation but incorrect. Unfortunately it is repeatedly trotted out to put every move that the government takes towards subsidy rationalisation in an extremely unfavourable light.
In the context of the recent 20-sen increase in the price per litre of diesel and RON95 petrol it is wrong to say that this could be avoided if subsidies to independent power producers (IPPs) and oil companies are removed.
The simple, unvarnished truth is this – the government does not at all subsidise IPPs or oil companies – not one sen.”
The low cost of natural gas charged by Petronas to the power producers means that tariff of electricity that Malaysians enjoy in the everyday lives be it reflected in the cost of production, cost of operation, cost of sales or even mere in schools, hospitals and homes is at where it is. Unequivocally, Malaysians should pro-actively contribute to utilise the demand for energy and usage of power effectively.
The debate will now trot on should the burden of cost of production, production or sales be burdened by Petronas or there should be pro-active initiatives for industries and commercial entities to produce more efficiently, increase production and sale and thus, capitalise of the economies of scale. There is a trending growth for Malaysia as a net importer of hydrocarbon, particularly crude oil.
Then again, there is the added argument that a balance between the cost of power generation and maximise returns reliasable should be strived so that more could be derived by Federal Government from Petronas in the form of taxes, royalties and dividends and eventually channeled to more deserving expenditures.
The annual Federal Government expenditure is growing and there is the notion that the annual percentage of GDP deficit have to be reduced. The demand for the interest of the majority to be looked after in the ambit increased cost of living is an added burden to the Federal Government. It is expected that specific programs would be announced in the Bajet 2014.
Then again Prime Minister Dato’ Seri Mohd. Najib Tun Razak’s Bumiputera Economic Plan and Strategy announced on Saturday fortified the need to address the growing socio-economic disparity between Bumiputera and Non Bumiputera. Although the necessary adjustments are required to mitigate the underlying factors and implementation of these policies and transformation plan.