KUALA LUMPUR: The government will soon revise electricity tariffs for the next six months but economists do not expect most households as well as small and medium businesses to be affected.
The government might offer some scope to lower tariffs but most likely the tariffs would be maintained as coal and gas prices had stabilised, they said.
Malaysia University of Science and Technology economist Dr Geoffrey Williams said Prime Minister Datuk Seri Anwar Ibrahim had stated that subsidies for the high income group or T20 would be removed. But those for lower income groups would remain.
"The same will happen for high users in the commercial and industrial sectors but micro, small and medium enterprises (MSMEs) will be unaffected.
"We already have tiered pricing where higher electricity users pay a higher price per kiloWatt hour (kWh). The main change will be removal of subsidies for the very highest user group," Williams told the New Straits Times.
He said removing the subsidies for households using above 600kWh or more a month would save RM1.96 billion and affect only around 11 per cent of households.
"Removing the subsidies for high users in the commercial sector will save RM1.93 billion and affect fewer than 3.0 per cent of businesses.
"All MSMEs will be exempted. So around RM4 billion will be saved and almost all households and small companies will be unaffected. So this is a good move," he added.
Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad today said users could take a cue from the stabilising coal and gas prices in the first half of the year (1H2023) to gauge the trend for electricity tariffs in the second half.
The 2H2023 revision, through the Imbalance Cost Pass-Through (ICPT) mechanism, will stretch from July 1 to Dec 31 this year as the government reviews the ICPT every six months.
Nik Nazmi's statement came after Prime Minister Datuk Seri Anwar Ibrahim's announcement on doing away with electricity subsidy for T20.
Nik Nazmi, however, said the Cabinet had yet to discuss as to whether the targeted subsidy for the household or domestic sector would be implemented in 2H2023.
He added that the targeted subsidy would be based on the market trend for coal and gas prices.
"You can reflect market prices of coal and gas to see the trend of electricity tariffs. The prices have now stabilised from previous years," he told reporters after launching Asean Green Hydrogen Conference 2023 here today.
Universiti Malaya Business and Economic Faculty deputy dean Associate Professor Dr Izlin Ismail said although the T20 might no longer get subsidised rate, the tariffs for 2H2023 might not be too much higher than the current one as energy prices had come down.
"T20 will likely pay more than what they are paying now. But due to lower energy prices, the rates will not be too drastic. Good timing for this change in policy," she added.
Putra Business School economic analyst Associate Prof Dr Ahmed Razman Abdul Latiff said the government should avoid a broad-based removal if it wanted to implement targeted subsidies for different income groups.
Razman said he would prefer the subsidies for the B40 and M40 to remain.
He added that the requirement for subsidy removal must be further refined based on the location, number of people in the household as well as income level to avoid additional burden to the lower income groups.
"TNB has smart metres, they can monitor electricity consumption to check the consumption level before proceeding to removing the subsidies. This will facilitate the government to determine which households can be excluded from the subsidy allocation especially for M40 and T20 income groups.
"As for T20, there needs to be an additional requirement and not just based on the consumption but also on income and location of the individual," he said.
On electrical subsidy for commercial industry, Razman reiterated that any removal for the sector needed to be strategic to avoid affecting inflation rate and price increase of products and services.