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Government Should Moderate Increase in Revised Natural Gas Tariff

Press Release

The Federation of Malaysian Manufacturers (FMM) is most concerned over the significant increase in natural gas tariff.

 

While the notification of one month is welcomed and a good step forward, the manufacturing sector hopes to receive notice of at least three months ahead for better planning, especially for exporters. 

Of greater concern is the significant increase in the natural gas tariff. The 16% increase in natural gas pricing stems primarily from the high base tariff which was raised from RM28.05/mmBtu to RM30.90/mmBtu. FMM reiterates its concern and calls on the Government to review the high base tariff rates for the regulatory period 2017 to 2020. 

The actual increase in natural gas tariff is higher than the 16%. The average effective tariff for the manufacturing sector had increased from RM26.46/mmBtu to RM32.52/mmBtu which is a 22.9% increase. Besides energy pricing, the manufacturing sector expects higher human resource and logistics related costs in 2018. There is also concern over market prospect arising from moderation in global economic growth. 

FMM has always advocated that the move towards market parity should give due consideration to the impact on businesses and their ability to absorb hefty increases in the costs of doing business at short notice.

 

FMM hopes that the Gas Communication Plan study to measure the impact of subsidy rationalisation on industry would be expedited in time for the next price review.

 

The Government should also seriously reconsider FMM’s earlier proposals to review the high base tariff reference prices as well as to cap the quantum of pass-through gas costs to a more reasonable level.

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