‘LET TARIFFS BE IN LINE WITH COAL, GAS PRICES’

This will enable people to gain from any downward pricing trend, say economists

IT’S about time electricity tariffs were charged according to the global movement of coal and natural gas prices, said economists. This would enable businesses and the masses to benefit from any downward price movement, they said when commenting on Prime Minister Tun Dr Mahathir Mohamad’s statement that the government was mulling lower power tariffs.

“The government is considering reducing electricity tariffs in view of falling coal and gas prices in the international market,” he said at the MyCuepacs Care dialogue session with the Congress of Unions of Employees in the Public and Civil Services, Medi- care Assistance Sdn Bhd and Pos Malaysia Bhd, here, yesterday.

Spot coal cargo prices for exports from Australia’s Newcastle terminal have fallen by a quarter to below US$90 per tonne since the middle of last year.

Asian liquefied natural gas spot prices for May deliveries reportedly fell US$0.80 (RM3.25) to US$4.65 per British thermal unit yesterday.

Putra Business School business development manager Prof Madya Dr Ahmed Razman Abdul Latiff said reduced tariffs would increase the disposable income for the people and allow businesses to improve their profits.

Businesses are required to pay a surcharge of 2.55 sen per kilowatt hour (kWh) from this month to June due to the higher fuel and generation costs.

“Any reduction in electricity tariffs will be welcomed, considering that starting this month, businesses have to pay the surcharge of 2.25 sen per kWh, which will result in higher cost of products and services,” he said.

However, Razman said there should be a cap on the tariffs so that when the prices went up again, the people would not be too burdened.

Tenaga Nasional Bhd (TNB) uses primarily coal and gas to generate electricity in meeting more than half of the country’s power needs.

The rest of the electricity is produced by independent power producers from the private sector.

Coal, mainly purchased from Indonesia, Australia, South Africa and Russia, makes up 53 per cent of TNB’s feedstock for power generation.

Gas accounts for 42 per cent of the raw material mix while the rest are from renewable sources such as hydroelectric, biomass, biogas and solar.

Economist Izzuddin Yussof said under the Imbalance Cost Pass-Through mechanism, lower coal price should lead to a lower electricity tariff.

“The lower tariff should be beneficial to businesses, especially the manufacturing sector, as it will lead to a lower utility cost,” he said.