Businesses to pay more for piped gas from July 1

  • Corporate News
  • Wednesday, 13 Jun 2018

To recap, the government had prescribed the incentive based regulation (IBR) framework which sets the base tariff for a regulatory period of three years from January 2017.

KUALA LUMPUR: Businesses and high-end condominiums which receive natural gas through the pipe system will have to pay more under a scheduled increase with effect from July 1.

Gas Malaysia said on Wednesday these customers will have to pay higher tariffs after it imposes the surcharge of 77 sen, raising the tariff to RM23.80 per one million British Thermal Units (BTU).

The incentive based regulation (IBR) framework sets the base tariff for a regulatory period of three years from January 2017.

The company said it had received the go-ahead from the Energy Commission to raise the surcharge under the mechanism for the tariffs following the global increase in gas prices.

The IBR allows changes in the gas costs to be passed through via the Gas Cost Pass Through (GCPT) mechanism every six months.

Gas Malaysia said that in addition, under the GCPT mechanism, a surcharge of 77 sen per MMBtu will apply to all tariff categories due to the higher actual gas costs against the reference gas costs in the base tariff in this period. 

"This translates to an average effective tariff of RM32.69 per MMBtu.

“The average natural gas base tariff is set at RM31.92 per MMBtu for the period beginning July to December 2018 in line with Gas Malaysia’s announcement on Dec 28,  2016,” it said. 

While the tariff revision has no material impact on Gas Malaysia’s business operations, it is expected to contribute positively towards the financial position of the company for the financial year ending Dec 31, 2018.

Meanwhile, the Malaysian Gas Association (MGA) supports the revision to the natural gas tariff for the non-power sector in Peninsular Malaysia.

MGA said it applauded the government’s market liberalisation efforts including deregulation of gas price to achieve a market-based pricing. 

MGA secretary general, Rosman Hamzah said: “Aligning the domestic gas price with the international market creates a competitive and dynamic environment, which promotes efficient resource allocation and utilisation, ensuring Malaysia’s energy security.

"We are confident that in the long run, a level playing field will increase participation and pave the way for stronger socio-economic progress in the country."

He said in support of the government’s initiative to liberalise the Malaysian gas sector, MGA will continue to enhance awareness on the benefits of natural gas, increase acceptance on Malaysia’s gas market reforms and facilitate growth of the natural gas industry.

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