Government ‘no option’ but to raise power rates, PM says
The Malay Mail Online – 3 hours agoRELATED CONTENT
- Prime Minister Datuk Seri Najib Razak today said Putrajaya had no choice but to raise …
KUALA LUMPUR, May 16 — Driven by the high cost of fossil fuel, Putrajaya had no choice but to raise electricity tariffs despite knowing the move will shoot up the prices of basic goods and services, Prime Minister Datuk Seri Najib Razak said today.
Najib said refusal to increase tariffs would result in the government having to subsidise the country’s sole power company Tenaga Nasional Berhad (TNB) using public funds and this would hamper development spending.
“It's not that we want to raise (the) tariff. The cost of fossil fuel is rising so we have to raise it.
“What options do we have? If not, we would have to use public fund(s) to subsidise TNB. The reality is, we have no options,” he told TNB staff at the government linked company’s anniversary here.
Najib, who is also finance minister, said it would be the duty for TNB staff to explain to consumers the rationale behind the move to raise power tariff.
Power tariffs rose by an average of 15 per cent effective January 1, after Putrajaya announced on December 2 last year that it had approved the increase by utility firm Tenaga Nasional Berhad (TNB).
Despite the increase, Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said the government would still have to spend RM14 billion on subsidies and rebates.
In February Malaysians consumers and firms still adjusting to the recent electricity tariff increase have been warned to expect more to come, with analysts at one of Australia’s biggest banks predicting ASEAN countries will hike power rates this year.
Pointing to steadily increasing prices for liquefied petroleum gas, the primary fuel source for power generation in Malaysia and many other ASEAN states, analysts at ANZ forecast that governments in the region will be under pressure to hike electricity rates further.
Predicting that energy costs will add another half per cent to inflation rates, ANZ also warned of possible fallout from citizens who are yet to come to terms with being weaned off decades of subsidies and price support.
Inflation accelerated to 3.2 per cent in December, according to Bank Negara Malaysia in February surpassing previous estimates. That annual rate was the highest in two years.
Changes to power tariffs in Malaysia invariably lead to accusations of cronyism and nepotism enjoyed by so-called Independent Power Producers (IPPs) that generate and sell electricity to Tenaga Nasional Bhd (TNB) using subsidised gas.
Although authorities repeatedly deny that the IPPs profit from increases to energy rates, the secretive nature of the concessions continue to fuel speculation that the firms were enjoying supernormal profits at the expense of the public.
