Likely power rate hike next week, says Nanyang

Putrajaya may seek to stave of fuel price hikes by raising electricity tariffs, said Nanyang. — Reuters pic

KUALA LUMPUR, May 19 — The government will likely announce a hike in electricity tariffs next week as the Najib administration seeks to keep ballooning petroleum subsidies in check, Nanyang Online reported today.

Sources told the Chinese language daily the government may forego cutting RON95 subsidies in favour of bumping up electricity rates due to the rising cost of natural gas and coal, which are used to generate more than 90 per cent of the country’s power.

Announcement of the hike, which Nanyang said will impact commercial and industrial users the most, was originally slated for May 12 but was pushed back to next Wednesday following notice of the sugar subsidy cut on May 10.

The Cabinet is expected to make the final decision soon whether to cut petrol subsidies or raise electricity rates, but government sources told the newspaper the latter option was more likely.

Domestic Trade, Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob hinted on Tuesday that RON95 subsidies would be cut when announcing next month’s review of petroleum products.

Despite his earlier promise that petrol prices would not rise, Ismail Sabri said he could not guarantee an indefinite freeze as the government’s petrol subsidy burden is expected to more than double from RM8 billion in 2010 to RM18 billion this year.

Just a day before, his ministry had announced that the diesel super subsidy for nine categories of commercial vehicles would be abolished effective June 1.

The nine categories comprise prime movers, general cargo movers, Luton box vans, vans, rigid lorries for bottled beverages, rigid tanker lorries for flour transport, rigid lorries for refrigerated goods, water tankers and limousine taxis.

This followed last week’s announcement by Deputy Agriculture and Agro-based Industry Minister Chua Tee Yong that fuel subsidies for some 1,200 Zone C2 fishing vessels would be cut from the same date.

Prime Minister Datuk Seri Najib Razak earlier this week reaffirmed his commitment to the gradual removal of subsidies — which he said was “like opium” — to help bring Malaysia’s budget deficit under control.

“Subsidies as a whole are like opium. Once you take opium it’s hard to kick the bad habit. Once you provide subsidies it’s hard to take them away without some political cost,” he told an audience at Oxford University’s Centre for Islamic Studies on Tuesday.

But opposition lawmakers have slammed the subsidy cuts, which they said would burden lower and middle income groups and widen the wealth gap if not cushioned by targeted rebates.