We’ll be forced to raise prices due to steep hike in power rates, warn SMEs

 

Samenta president William Ng said they were alarmed that the government had allowed the increase in electricity rates at a time when many SMEs were virtually ‘limping’ towards recovery. (Bernama pic)

PETALING JAYA: A business group has slammed the government for raising electricity rates for commercial and industrial users, saying that businessmen may be forced to pass on some of the increase in operational costs to consumers just like Tenaga Nasional Bhd (TNB) is doing.

It said as it is, small and medium enterprises (SMEs) were already struggling after being hit by the Covid-19 pandemic, and the 11-18.4% hike in electricity rates from next month will surely hamper their recovery.

Small and Medium Enterprises Association of Malaysia (Samenta) chairman William Ng said they were alarmed that the government had allowed the rate increase at a time when many of the SMEs were virtually “limping” towards recovery.

“For most SMEs, especially those in the manufacturing sector, electricity is the second or third largest cost factor, behind raw materials and labour costs.

William Ng.

“A hike of up to 18.4% in utility bills could mean a reduction of between 20% and 40% in their profits.

“This can even mean a difference between making and losing money,” he said in a statement today.

According to the Energy Commission, the increase will affect more than 1.6 million commercial and industrial users.

Ng said the association had urged its members to refrain from raising prices despite the steep hike in electricity bills and cost of raw materials.

However, the government should also understand that most SMEs were already operating on a “razor-thin profit margin”.

“They are struggling to find their footing amid the pandemic.

“If the proposed hike continues as planned, it will be difficult, if not impossible, for businesses to absorb the increased costs without passing them on partially to the consumers, just as TNB is doing.”

Ng said while they understand the need for periodic adjustments in tariffs, they cannot accept the quantum or the timing for this, especially since TNB reported a 9.6% jump in revenue and 4.6% hike in earnings during the first nine months last year.

“TNB CEO Baharin Din has also said that power demand is expected to improve this year as more economic activities open for business.

“As such, there are no plausible reasons for such a steep hike now.”

He urged Prime Minister Ismail Sabri Yaakob to step in to rescue the ailing SMEs which will be hit hard by the increase.

“If the hike must be allowed, then we urge the Cabinet to consider a far lower quantum of increment without affecting TNB’s continued profitability or its resilient performance.”

Commercial and industrial users, besides losing the 2 sen/kWHh rebate given previously, would be imposed a surcharge of 3.70 sen/kWh in their electricity bills.

Ismail said yesterday the government had already spent over RM1 billion in subsidies to industrial and commercial companies.

“This subsidy concept is flawed as it is given to larger companies when by right it should be given to targeted groups such as the poor. We are now in the process of rectifying this,” he said yesterday.

He said he had asked the domestic trade and consumer affairs ministry (KPDNHEP) to engage with major companies, especially the industries, so that there would be no increase in the price of goods. - FMT