Gas Malaysia gets EC’s nod for higher natural gas tariff for non-power sector

Higher cost: Rubber glove producers are among energy-reliant industries that are likely to be affected by the tariff increase.

PETALING JAYA: Natural gas distributor Gas Malaysia Bhd has announced that the Energy Commission has approved higher natural gas tariff for the non-power sector in Peninsular Malaysia, from Jan 1 to June 30.

While the higher tariff would be a boon for Gas Malaysia, businesses in Peninsular Malaysia should brace for higher cost of operations.

Higher gas tariff would increase cost for energy-reliant industries such as the iron and steel, rubber gloves and chemical-based industries.

In a filing with Bursa Malaysia yesterday, Gas Malaysia said the average natural gas base tariff would increase to RM32.69 per one million British thermal units (MMBtu) from the current price of RM31.92 per MMBtu for the first half of 2019.

“The government has prescribed the incentive-based regulation framework which sets 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 gas cost pass through (GCPT) mechanism every six months,” it said.

The firm said under the GCPT mechanism, a surcharge of 23 sen/MMBtu would apply to all tariff categories for the period beginning Jan 1 to June 30.

This translated to an average effective tariff of RM32.92/MMBtu, which is an increase of 0.7% from the current average tariff after surcharge.

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

Shares in Gas Malaysia closed two sen lower to RM2.69 yesterday.

The Malaysian Gas Association (MGA) commended the government’s decision to maintain the course on gas market liberalisation which would ensure wider options for Malaysia’s gas consumers.

“The ongoing gas market liberalisation and alignment of domestic gas prices with the international markets will create a competitive and dynamic environment, promoting efficient allocation and utilisation of resources to ensure long-term energy security,” it said.