54% - 66% (??) Increase In Electricity Tariff for MV, HV Industrial Users. No Reduction For Home Users.

 First here is some news:

• MV, HV industrial users, MNCs 20 sen kWh surcharge starting Jan 1
• govt still subsidise RM1.93b to avoid significant increase surcharge passed  entirely to users
• domestic, low-voltage users, SMEs specific agriculture no surcharge
• domestic, LV users, allocated RM8.74b in subsidies
• 9 million electricity users, over 90% in Peninsular, not affected
• SME includes micro-business, restaurant, grocery, bakery, workshops
• electricity subsidy slashed to RM10.76b from RM14.91b
• additional RM4.16b can now be allocated to other 'use'
• existing surcharge for MNCs, HV, MV users at 3.7 sen/kWh.
• MV users utilise 11kV cables for electricity supply
• HV users utilise 132kV cables for their electricity supply

 

My Comments :

MV, HV and LV refer medium voltage, high voltage and low voltage respectively.

I checked the TNB tariffs page. There is no classification for MNCs. Its either Low Voltage, Medium Voltage etc Industrial Tariff. See here:

 

The tariff for industrial users ranges between 30 sen/kWh to 37 sen/kWh.
So now they will add a 20 sen per kWh surcharge to these tariffs. 
That means 50 sen/kWh to 57 sen/kWh.
That is a jump of 54% to 66% per kWh.

This is a significant jump. It is a very big jump.

A friend of mine who is a financial advisor to IPPs said:

'Dunno if this newbie knows what he's talking about. A surcharge of 20 sen/kWh means that MNCs pay in excess of 50 sen/kWh in electricity costs, which is way higher as compared to Indonesia，Vietnam and Cambodia. Looks like we are trying to drive away foreign investors'.

My Comments :

As I said above there does not appear to be a MNC classification for TNBs billing purposes. It is either Low Voltage, Medium Voltage or High Voltage Industrial Users.

This means all MV and HV industrial users (as stated in the news report above) will be affected the same, regardless of whether they are MNCs, local companies, Malaysian owned or foreign owned. 

From paying 30 sen/kWh to paying 50 sen/kWh is a 66% jump in electricity rates. This will certainly add to the cost of production and to the cost of doing business in Malaysia.

Yes it may likely shoo away some Foreign Direct Investments from investing in our industries, especially if power tariffs in neighbouring countries like Indonesia and Thailand are cheaper. 

But more relevant to us the prices of manufactured products in the local market will also be affected. 

As an example foreign MNCs like Nestle are not only huge but they manufacture and sell a large variety of food products in our domestic market.

Quite certainly they are going to be hit by this 20 sen/kWh surcharge.  

May I add that there is no reduction in electricity tariff for ordinary home users.

In other words there will be no reduction in your home electricity bill in January 2023 onwards (for the same consumption of electricity). There will be no savings at all.

The MV and HV industrial consumers will be paying more, the government will save RM4.16 billion (additional RM4.16b can now be allocated to other 'use') but the average Malaysian household WILL NOT BE GETTING ANY REDUCTIONS IN THE ELECTRICITY TARIFF.

So this action does NOT lower the cost of living for the average Malaysian household. 

Surcharge 20 sen/kWh untuk tenaga elektrik (MV dan HV Industrial user) tidak akan menurunkan kos sara hidup  bagi pengguna di rumah atau keluarga yang biasa dalam negara kita. 

On the other hand, higher electricity tariffs suffered by MV and HV industrial users may cause the price of goods to increase because their cost of production will go up. There will be price inflation.

Sebaliknya, kos tarif tenaga elektrik yang lebih tinggi bagi pengguna industri  (MV dan HV) bakal menyebabkan harga jualan produk dan barang keluaran mereka meningkat.  Inflasi harga barang naik akan berlaku sekali lagi.

What I find perplexing is that the price of oil has actually come down. Just a few days back the price of RON 97 petrol has been reduced by 20 sen per litre. 

RON97 is a minyak orang kaya because even today usually higher performance or higher tech cars use RON 97. 

Plus Malaysian natural gas prices have also been coming down, at least until September 2022:

 

 

So if the price of RON97 petrol has come down 20 sen per liter, if the price of natural gas has been coming down, then is that 20 sen/kWh surcharge timely?

The government will save RM4.16 billion (as reported above) and TNB will go on to make a few billion Ringgit in net profits.

But the bottom line is - there is no reduction in the kos sara hidup for the ordinary Malaysian household. My electricity bill and your electricity bill for January 2023 and onwards is going to remain about the same.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.