Isnin, Mei 29, 2006

Power hike: Inflation fear for consumers

While industrial consumers of electricity are the ones affected most by the June 1 hike in power tariffs, a consumer body has expressed fear that they may pass on their extra costs to consumers.

Worries have also been expressed that the nation’s economic growth and competitiveness may be affected in the long run. Below are some immediate reactions from consumer groups and the opposition on the new electricity tariff structure approved by the cabinet today.

N Marimuthu, Era Consumer president

At least the 60 percent of domestic users who use less than 200kw a month will not be affected and in that sense, today’s announcement is a win-win situation for both parties. We had requested the minimum threshold level to be set at 250kw as opposed to the proposed 150kw.

The industrial consumers, who are the biggest electricity users, will now have to go on energy saving.

However I urge them not to pass the extra cost incurred from the new electricity structure onto the consumers.

T Indrani, Federation of Malaysian Consumers Associations chief executive officer

Actually, 250kw will be more comfortable for all as we found the general household electricity consumption rate is more than 200kw.

Nevertheless, a hike in rate for consumption above 200kw will be something that the low-income groups will not feel so much. At this point in time, they will be able to bear with the new electricity structure although they have to be more prudent.

My fear is that if industrial consumers are going to pass the extra cost onto consumers, then everything will back to square one. Whenever there is a price hike in raw materials - like fuel and in this case, electricity - then the prices of goods and services are likely to be hiked as well.

The government must make sure that the living cost of Malaysians will not go up anymore.

Lim Guan Eng, DAP secretary-general

The tariff hike is not in the national and consumer interest because it will worsen inflation. It will affect 41 percent of Tenaga Nasional Berhad’s (TNB) 6.2 million consumers and this just to protect the exorbitant profits of the independent power producers (IPPs).

Inflation was the highest in seven years at 4.8 percent in April 2006 as a result of the fuel hike and this forced Bank Negara to increase interest rates to 3.5 percent recently.

Such a hike in interest rates would definitely affect economic growth and place serious doubts whether the Ninth Malaysia Plan’s objectives of six percent economic growth from 2006-2010 can be achieved.

Another important factor is that such tariff hikes by TNB is not in the national interest because the high, unfair and guaranteed profits of the IPPs continue to be protected. TNB is forced to purchase power generated by IPPs whether TNB requires it or not resulting in a reserve margin of 40 percent, one of the highest in the world.

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