Targeted subsidies on track

PETALING JAYA: Businesses impacted by the new electricity surcharge are hoping for a moratorium but the government is maintaining its stance to provide targeted subsidies to Malaysians.

“The move from providing blanket subsidies is crucial for energy efficiency and also to ensure the government can protect M40 and B40 domestic users,” said Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad.

This would also allow the government to focus on other areas of spending, he told The Star.

All medium and high-voltage users and multinational corporations have to pay a 20sen per kWh (kilowatt-hour) electricity tariff rate from Jan 1 to June 30.

The previous rate was 3.7sen.

Asked whether the government would review its decision, Nik Nazmi said that this was the Imbalance Cost Pass-Through (ICPT) cycle, which takes place every six months.

“The next cycle starts on July 1,” he added.

Responding to calls from commercial users for a moratorium until the end of this year, Nik Nazmi stressed that the government was moving towards targeted subsidies.

“Even with the increased surcharge, high and medium-voltage non-domestic users still enjoy assistance from the government,” he said.

In previous news reports, Nik Nazmi said that this transition was no longer an option, despite criticisms from the industries.

He explained then that the government needed to ensure a high reliability of the national electricity supply system, as well as protecting the environment and “at the same time, maintain a tariff rate that people in Malaysia could afford”.

Meanwhile, Malaysia University of Science and Technology economics professor Geoffrey Williams believed that large businesses could afford the hike in power tariffs.

“These are large businesses, they can afford this change and they knew for a long time that the tariffs would be increased so there really is no excuse for them to raise this issue now,” he said.

The change in tariffs was part of the subsidy rationalisation and would save the government a great deal of money that could be used for other priorities, he said.

He said the government should press on with this as part of the subsidies reduction programme.

“These large businesses will have to adapt,” Williams added.

He said businesses who passed on the cost to consumers should be called out and “they will be punished in the marketplace”.