Gas price hike in 2018
THE price of gas used for cooking and fuel by the industrial and commercial sectors will be increased next year, reflecting the higher price of natural gas in the international market. This will be the first gas tariff hike since July 2016.
The increase to the effective tariff rate is significant, at an average of RM4.47 per million British thermal units (mmbtu) or 16%, as it includes a surcharge under the new gas cost passthrough (GCPT) mechanism.
Among the sectors that will be heavily impacted is the rubber glove industry, which is set to see costs increase by an average of US$0.50 to US$0.75 per 1,000 pieces of gloves, depending on the type of gloves and efficiency of the factories.
The Malaysian Rubber Glove Manufacturers Association told Starbiz that Malaysian glovemakers were within the category of businesses currently paying RM26.11 per mmbtu, and would be subject to a 14.5% increase following the tariff hike. He said the increase was significant and that glovemakers would have to pass the additional costs to customers.
“However, we are quite annoyed as we have already requested that Gas Malaysia Bhd gives us at least a twoto three-month notice before the tariff revision, as this will allow us to factor in the cost so we can pass it on to the consumers – but we were not given any such notice.
“Now, we only have a 30-day period to give notice to our customers and this is not enough. Glovemakers will be forced to absorb one or two months of additional costs before it can be passed on to our customers,” he said.
He added that the unexpected additional costs were a loss of revenue for the industry as well as the country.
Gas Malaysia announced yesterday that the government had approved, via a letter from the Energy Commission dated Nov 28, the revision of the natural gas tariff for the non-power sector in Peninsular Malaysia from Jan 1 to June 30, 2018.
It told the stock exchange that the government had prescribed the incentive-based regulation (IBR) framework which set the base tariff for a regulatory period of three years from January 2017 and allows changes in the gas costs to be passed through via the GCPT mechanism every six months.
The average natural gas base tariff was set at RM30.90 per mmbtu for the period beginning January to June 2018. In addition to this, under the GCPT mechanism, a surcharge of RM1.62 per mmbtu will apply to all tariff categories due to the higher liquefied natural gas price against the reference price in the base tariff during this period, the group said.
This translates to an average effective tariff of RM32.52 per mmbtu across