Higher power tariffs affecting SMEs, says Dr Wee

KUALA LUMPUR: Higher electricity tariffs are impacting small and medium enterprises (SMEs), says Datuk Seri Dr Wee Ka Siong.

"What is happening now is that domestic uses are not affected but the commercial SMEs are affected.

"Based on estimates done by five associations, the increase in tariff is between 20% and 40% and this will contribute to a rise in the inflation rate," he said.

Dr Wee said this when raising the issue to Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad, who was wrapping up his ministerial replies in the Dewan Rakyat on Thursday (Feb 23).

Dr Wee (BN-Ayer Hitam) noted that the tariff increase had come at a time when SMEs were in the process of reviving the economy.

"The increase from 3.7sen per kWh to 20sen is drastic and is almost a six-fold increase," he said.

He asked what the government could do to alleviate this situation for the SMEs.

In December, the government announced that electricity tariff for domestic users and those involved in the food production sectors would not be increased under the imbalance cost pass-through (ICPT) mechanism.

The increase would only affect commercial users such as large manufacturing companies.

In January this year, the government decided to maintain the current electricity tariff rate for domestic users in Peninsular Malaysia for the Regulatory Period 3 (RP3) from Feb 1 to Dec 31, 2024 under the Incentive-Based Regulation (IBR) mechanism.

In response, Nik Nazmi said that the tariff hike did not affect domestic users but only commercial users.

He said the increase in the tariff would encourage commercial users to adopt more energy-efficient production methods for their businesses.

However, he said the government was willing to consider more favourable tariff rates for commercial users in the future.

Earlier, Nik Nazmi informed the House that the government spent RM14bil to subsidise electricity last year.

He said that the subsidy would remain for those in the food production sector but at a lower rate.

Based on estimates, he said that the government will have to spend RM10bil in electricity subsidies for the first six month of this year.