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Monday, December 2, 2013

The upward spiral — Sin Chew Daily

NOVEMBER 30, 2013

NOV 30 — Following the hike of petrol and diesel prices recently, subsidies on white sugar have been removed and the 6 per cent GST to be implemented from 2015. Besides, electricity tariff will also be increased by 5 per cent to 10 per cent from early next year although Cabinet is yet to decide on the actual margin.

Before we can even become a high-income country, we have to first bear the brunt of skyrocketing prices.

The government has tried to trim government expenditure and shrink our budgetary deficits by way of progressively abolishing subsidies. The government spends up to RM12 billion in fuel subsidies every year, and is now pinning its hopes on reduced fiscal burden through increased electricity tariff.

As a matter of fact, ever since fuel prices were raised in October, rumours have it that electricity tariff would soon follow suit and the margin could be as high as 14.9 per cent, twice as much as the average 7.12 per cent during the last hike in June 2011.

Although the margin has yet to be approved by the Cabinet, it appears certain that electricity tariff is well on its way up. However, given the fact that Malaysia is a producer of natural gas and petroleum, a 10-20 per cent hike in the price of electricity within a short span of two years has indeed raised controversy.

To be sure Tenaga Nasional needs the additional revenue to sustain its operations, but the government must also take into consideration the chain effect that comes with a drastic increase in electricity tariff. All buildings need electricity, be it residential houses, schools, factories or small businesses.

Even as the government assures the public that the hike will not increase the burden of low-income families — as households using less than RM20 of electricity a month will continue to be exempted or have their tariff minimally adjusted — the problem is this hike will directly increase the operational cost of businesses across all sectors, in particular the heavy users such as heavy industries, construction material manufacturers and other manufacturers. Prices of related products will shoot up, and such costs will eventually be passed on to the consumers.

It is foreseeable that ordinary people will have to brace for yet another round of mounting inflationary pressure, adding to their financial burden.

Other than increased electricity cost, Malaysians will also have to prepare for the impact from the imminent implementation of the 6 per cent GST, especially the middle- and lower-income groups. With the people’s living standards declining, how can we move ahead towards the goals of a developed nation?

Before approving the margin of electricity tariff hike, the Cabinet should first consider the widespread impact from it while contemplating other means to diversify the power load such as wind and solar power sources.

On top of that, the government must also review the operational efficiency of TNB as well as its agreements with independent power producers (IPPs). There are unfair terms in the power purchase agreements signed with the IPPs, which translates into unfavourable electricity tariffs. — Sin Chew Daily

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malay Mail Online.

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