Power tariff hike inevitable, says energy minister

Due to climbing international prices of fuel including coal and natural gas, adjustment of power tariff in the future is inevitable, said Energy, Green Technology and Water Minister Peter Chin.

Although he did not elaborate on the time and quantum of the electricity tariff hike, Chin pointed out that higher electricity prices will encourage the public to save energy and switch to products with green technology.

In an interview with Chinese newspaper Sin Chew Daily, Chin revealed that Malaysia's consumption of electricity has increased annually by 3.4 percent, slightly lower than the gross domestic product (GDP) growth, forcing the government to approve more power plants and to consider the option of a nuclear power plant.

Citing Denmark, which records stable electricity usage in the past 20 years, he stressed that high economic growth does not necessarily come with the expense of high power consumption.

“Maybe we can't avoid the rise of power consumption but if we could attenuate the rise, we would be able to postpone the time to build more power plants,” he said, emphasising the importance of raising the awareness of the public and children on saving power.

According to the report, Chin conceded that the government is considering the option of constructing at least one nuclear power plant in the coming years, but he repeated that no final decision has been made.

Last week, Chin kept mum when asked whether a new round of electricity tariff hikes is imminent in November.

The federal government has agreed to adopt a ‘Fuel Cost Pass Through’ mechanism last year to determine national electricity tariff rates in the future.

This is in conjunction with the reduction of natural gas subsidies provided to power producers by RM3 per mmBtu for every six months, until it reaches the market level by 2016.

However, the government has since then only announced anelectricity tariffs hike of an average 7.12 percent in June last year, with no further adjustment after that.

The issue, which was not mentioned at all in the Budget 2013 tabled last week, is deemed politically-sensitive, especially with the looming general election, which must be held before June next year.