Electricity up 7%: No measures to cut graft, snap polls within months

UPDATE 3 Prime Minister Najib Razak has announced a hike in electricity rates that will see consumers paying an average of 7.12 per cent higher beginning June 1.

But while he tried to soften the blow for the poorest in the country, he failed to implement a plan to sustainably keep prices down and reduce national debt.

Najib was also sharply criticised for announcing "short-term" measures to facilitate snap general elections that pundits now predict will be in July or after Hari Raya in August.

"Subsidies have to come down, that's for sure. But corruption, wastage and so forth must also be tackled. What Malaysia is a grand plan to tackle inflation and contain the widening deficit rather than ad-hoc measures," Ramon Navaratnam, head of the Centre for Public Policy Studies, told Malaysia Chronicle.

In line, with a much-criticised programme to cut subsidies on a range of consumer essentials, such as petrol, fuel and sugar, government officials announced that power prices would rise by 2.23 sen per kilowatt hour or 7.12 per cent to to 33.54 sen kWh, from 31.31 sen kWh.

Domestic users who use less than 300kW unit per month will not be affected.

The multi-tiered price hike was announced at a joint press conference by Minister in the Prime Minister's Department Nor Mohamed Yakcop and Minister of Energy, Green Technology and Water Peter Chin Fah Kui.

They took pains to stress that the move will not affect "75 per cent of the population", as most households consume less than 300 kWh per month. According to them, 4.44 million out of a total 5.94 million households used less than 300kWh.

Short-term ad-hoc measures signalling GE within months

For those using 301kW to 1000kW units, the tariff has been raised from 0.1 to 10 percent, or RM0.07 to RM30.30.

However, the officials also said the waiving of electricity charges for those who record less than RM20 usage per month would cease on December 2011.

Natural gas prices would also rise by RM3.00 per mmBtu every six months until it reached market levels by 2016, when its price would be fully floated.

The price charged by state oil company Petronas for power generation would rise to RM13.70 per mmBtu from RM10.70, the officials added.

"It is commendable that the government has tried to structure the price rise so that the heavy users are the ones who will have to pay for their usage. But it would have been best if the price rises are announced together with other anti-flationary measures," Ramon said.

"These include programs to trim the fat from other parts of the government machinery, cutting projects that are non-essential, corruption and wastage must be confronted head-on. Then only will there be public confidence and investor confidence as well."

Meanwhile, in an immediate response, Pakatan Rakyat leaders said the latest hikes showed that the 13th general election would surely be called within months.

They slammed the measures as temporary ad-hoc stepss to facilitate the GE, and also expressed disappointment that the plan did not contain wider-ranging features to keep inflation from spiralling.

"It is clear the government can no longer cap inflation and price hikes anymore. The BN will now have to rush for general election before the economy worsens," PKR vice president Tian Chua told Malaysia Chronicle.

- Malaysia Chronicle