Tariff hike could sound death knell for many businesses, say groups

 

Business groups say the government should put off the increase in electricity tariffs for commercial and industrial users ‘until the energy situation becomes clearer’.

PETALING JAYA: Business groups, which are still struggling to recover from the pandemic, have urged the government to halt the increase in electricity tariffs, which came into effect on Feb 1.

Describing the increase under the Imbalance Cost Pass-Through (ICPT) mechanism as “shocking”, the groups said the situation could be re-assessed “when the energy situation becomes clearer”.

They said the hike in electricity charges was announced without any discussions with stakeholders and consumers.

“The hike is shockingly high, effectively more than 15% or up to 25% on an off-peak tariff. It is humongous and even in the best of times, it is unlikely to be possible for businesses to absorb,” they said in a joint statement today.

“At this critical juncture where all businesses, big and small, are still struggling in survival and revival mode, this hike could sound the death knell for many enterprises.”

On Feb 1, a surcharge of 3.7 sen/kWj was imposed on all non-domestic users, such as commercial and industrial companies.

The groups said the expected hikes in the cost of goods and services would further restrict and reduce their ability to purchase, resulting in dampened volumes and turnover.

“We understand that fuel costs have escalated due mainly to supply chain interruptions coupled with geopolitical trade play.

“However, once the supply chain is restored and normalcy returns, market forces will cause the predatory pricing to recede and competition will prevail,” they said.

They also said that in this predictable short-term disruption, it was more prudent for the government to intervene and support the “temporary pain” and not pass the burden on to consumers.

They hoped that the government would not fuel and set the train of inflation further.

“Currently, even without this unprecedented hike in electricity tariffs but merely due to the supply chain disruption, the inflationary pressures are already being experienced by all consumers,” they said. - FMT