Growing protest threat if power rates hiked in 2014

The government can expect to spark protests if it tries to pass on higher electricity costs to the public from 2014 as it has not been seen to have fully exhausted all other alternatives.

Pakatan's MP Rafizi Ramli said the move was akin to a drunk asking for more alcohol while SMI Association of Malaysia president Teh Kee Sin said it made no sense to help state oil company Petronas and Tenaga Nasional Bhd (TNB) save money as both were created to serve the rakyat.

"Taking away subsidy without solving mismanagement and we create a black hole for the government to continue to suck money away.

"It is like taking alcohol to give to a drunkard... no amount of new taxes can pay for the greed of BN," Rafizi (right), also PKR's director of strategy, toldMalaysiakini.

As government debt rises to record heights after over 15 years of overspending, Prime Minister Najib Abdul Razak announced that Budget 2014 would be a more prudent one. Subsidies on petrol, sugar, rice, gas, healthcare were all on the chopping board.

Opposition MPs have dubbed BN, the Barang Naik (price hike) government.

Minister of Energy, Green Technology and Water, Maximus Ongkili said on Wednesday that a 10-20 percent electricity hike was nowon the cards for next year. 

He said this would help government offset a RM130 million a year subsidy to the sector and also Petronas' annual RM8-10 billion loss by selling natural gas at controlled prices. This comes on the back of subsidy cuts for petrol and sugar in the last six months.

"The public have to expect this and brace ourselves for a year of price hikes in 2014," Rafizi said. "Once they push (goods and services tax) GST out in 2015, they know the public anger will be bad and it will be difficult to increase anything after that."

The Pandan MP said he was not trying to be a populist politician but common economic logic would not apply in Malaysia's case.

"It is not purely an academic or economic issue. The standard textbook answer is that subsidies are bad for the economy everywhere but the main problem is not subsidy but the governmenttrack record of uncontrolled spending.

"We are not in the same context as other countries because subsidy is not the root cause of our problem," he said.

‘Still stuck in financial mire'

He added that until the government was made fully accountable for its spending habits and answer to Parliament for "white elephant projects, overseas trips or private jets," then any attempts to cut subsidies would be considered "dangerous and unfair."

"They are just using subsidy as an excuse but they have not got out of the financial problems which they have created." 

Reports said that national utility TNB has not pushed up power tariff rates since 1997 for domestic/ residents at the bottom band, those who consume less than 200 Kilowatt-hour (Kwh) per month and it last hiked power rates for commercial users in 2011.

Minister Ongkili has not revealed government plans but hinted that the current structure where consumers using 300 kWh per month and below would not experience a tariff increase may be kept. 

He said compared with its Asean peers, Malaysia's tariff is lower than Thailand's and the Philippines' but slightly higher than in Indonesia, which subsidises its power sector the most.

"We understand the government efforts in wanting the rationalisation of subsidy... however we hope that the government will look into alternatives before raising prices," SMI's president Teh told Malaysiakini.

Teh said TNB should strive to review its contracts the Independent Power Producers (IPP) as many may claim to sell at a loss but their yearly financial reports still show them making huge profits year in and year out.

Sand now stone wall 

He also questioned why it was a problem for Petronas to subsidise natural gas for Malaysians as "the natural resources is owned by the rakyat".

Rafizi said opposition parliamentarians have been stone-walled on the IPP issue.

"There has been complete silence on IPP revision and very clearly the government is not interested in fixing the problem from that angle even though we have repeatedly raised the issue."

Furthermore, Teh disagreed that it was fair to say Malaysia must raise power rates to match its neighbours because she was a major gas exporter in the world, unlike Singapore or Thailand.

"Make a relevant comparison to Qatar for example which sells gas at even lower cost to its utilities," Teh said. 

He also suggested that the government study efficiency issues at TNB and Petronas to defray operating costs and also consider more alternative sources of energy.

Federation of Malaysian Consumers Associations (Fomca) CEO Paul Selvaraj, meanwhile, asked the government to consider low-income consumers, especially those living in public housing and low-cost houses.

He was reported in the New Straits Times (NST) as saying that the impact on these group should be minimized and that there should be extra efforts to encourage the purchase of energy-saving products before the implementation of new tariff .

Selvaraj could not be immediately reached for further comments.