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Government’s move to maintain electricity tariff shields consumers from direct impact of rising prices

04/07/2022 10:14 PM

By Siti Noor Afera Abu

KUALA LUMPUR, July 4 (Bernama) -- The current hikes in electricity tariff rate in several Asian countries have prompted the Malaysian government to put in place measures to shield consumers from the direct impact of rising prices.

The government, on June 24, announced that it was maintaining an electricity tariff surcharge of 3.7 sen per kilowatt hour (kWh) for non-domestic users while keeping the two sen rebates per kWh for domestic users.

The government will bear a subsidy of RM5.8 billion arising from this decision.

Economists opined that the government’s decision not to pass through a higher surcharge rate to consumers gave a huge relief to consumers, particularly businesses as a whole.

Juwai IQI Global chief economist Shan Saeed said the decision by the government is in line with market expectations in order to fully support the industry and enhanced economic confidence backed by strong domestic demand so that the gross domestic product (GDP) trajectory remained solid.

“Malaysia is still very affordable in the region,” he told Bernama.

Data from for December 2021 stated that the price of electricity in Malaysia is competitive at US$0.05 per kWh for households and US$0.088 per kWh for businesses, which included all components of the electricity bill such as the cost of power, distribution and taxes.

For comparison, the average price of electricity in the world for that period was US$0.14 per kWh for households and US$0.133 for businesses.

Shan said the report noted that during the same period, electricity prices for businesses among some ASEAN countries compared to Malaysia, namely Indonesia, was lower at US$0.075 per kWh but was higher in Thailand at US$0.105 kWh, the Philippines at US$0.123 kWh and Singapore at US$0.158 per kWh.

In Singapore, the government-affiliated electricity and gas distribution company, SP Group, announced that the electricity tariff for households would increase by an average of 8.1 per cent or 2.21 cents per kWh from July to September this year compared with the previous quarter.

The increase is mainly due to higher energy costs driven by rising global gas and oil prices exacerbated by the conflict in Ukraine, it said in a release last week.

SG Group said the electricity tariff would increase from 27.94 to 30.17 cents per kWh with the average monthly electricity bill for families living in HDB four-room flats would increase by 8.25 Singapore dollar before seven per cent goods and services tax (GST).

For Indonesia, the state power utility Perusahaan Listrik Negara (PLN) will impose some hikes in electricity tariffs for the first time in five years with households with a power capacity of 3,500 volt-amperes and above would see their tariffs raised by 17.6 per cent per kilowatt-hour while tariffs for government buildings would be raised by 17.6 per cent and 36.6 per cent, depending on the nature of the building.

According to its senior energy ministry official Rida Mulyana, tariffs would rise from July 1, including for households with 3,500 volt-ampere capacity and above, and would affect only middle- to upper-income households, as well as government buildings, and was expected to raise Indonesia's 2022 inflation rate by 0.019 percentage points.

Taiwan would also increase its electricity rates by an average of 8.4 per cent with around 22,000 large industrial users would face an increase of 15 per cent in their power rates, the country’s Ministry of Economic Affairs said.

It said electricity bills for small shops, low-voltage users and all pre-tertiary schools would not increase.

Residential electricity consumers who use less than 1,000 kilowatt-hours, accounting for about 97 per cent of households, will not be affected either.

“But residences that exceed 1,001 kWh will pay nine per cent more,” the ministry announced.

On June 27, the South Korean government decided to raise electricity rates by five Korean won per kWh for the third quarter to reflect spikes in the prices of fuels such as liquefied natural gas (LNG) and coal.

The country’s electricity rate has long been frozen despite spikes in fuel costs and Korean Electric Power Corp was allowed to raise the rate by three won per kWh in the fourth quarter last year, which marked the first increase in the electricity rate since November 2013.


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