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Sunday, September 25, 2022
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Businesses threaten to increase prices of goods due to steep hike in electricity tariff for businesses

Recently, the Energy Commission has announced there will be no increase in the electricity tariff rate for households in Peninsular Malaysia until late December 2024. However, this is not the case for businesses in Malaysia.

In response to the rising electricity rates for commercial and industrial users, the Small and Medium Enterprises Association of Malaysia (Samenta) said businesses may be forced to pass on some of the increase in operational costs to consumers, just like Tenaga Nasional Bhd (TNB) is doing.

Samenta president William Ng said 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.

William also revealed that for most SMEs, especially those in the manufacturing sector, electricity is the second or third largest cost factor, behind raw materials and labour costs.

“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, reported FMT.

In addition, the group also questioned the government why Tenaga Nasional Berhad (TNB) is increasing the price of electricity this year when it reported profits last year.

“While we can understand the need for periodic adjustments in prices, we cannot accept the quantum or the timing of it, especially since TNB reported a 9.6% and 4.6% jump in revenue and earnings respectively for the nine months ending 30 September 2021.”

“TNB’s CEO, Datuk Baharin Din was quoted as saying that demand is expected to improve in the coming months and into next year (2022) as more economic activities open for business.”

“As such by TNB’s own admission, the national utility company will be doing better in coming months, and there are no reasons for the steep hike, especially since it is aspiring to cut down its reliance on coal in its portfolio from 45% in 2021 to 10% by 2035,” William said.

With this, he said it is impossible for businesses to not increase prices and pass on some of the costs to consumers.

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