The Federation of Malaysian Manufacturers says it is disappointed with the government over the minimal reduction in imbalance cost pass through (ICPT) surcharge for 2H2024. The association which represents mostly SMEs said more transparency is needed in the calculation of the surcharge and the methodology on how the 1 sen was arrived for non domestic users.
The Government reduced the charges from 17 sen/kWh to 16 sen/kWh but FFM said the reduction in surcharge was also expected during the previous review period (1H2024) amidst the moderating coal price in the past one year.
It would also propose to the Government to review the eligibility of SMEs under medium voltage (MV) category to enable them to qualify for a lower surcharge similar to the rate given to the water services sectors, which currently is reduced to 2.7 sen/kWh from 3.7 sen/kWh previously. Industries in general including SMIs continue to operate under a challenging environment as uncertainties around economic growth and inflation outlook in 2024 remains a concern following the impact of subsidy rationalisation and prolonged geopolitical conflicts.
MSMEs account for 98% of total business establishments in Malaysia, employing 7.3 million in workforce, they also contribute to 37.4% of the country’s GDP, FMM said the continued high surcharge environment would not be tenable for SMEs to remain competitive in the long run.
Moving forward, as the Government is currently undertaking review of the Incentive Based Regulation (IBR) for Regulatory Period (RP) 4: 2025 – 2027, FMM hopes that the base tariff review, while addressing the revenue-cost structure mismatch in preparation for the energy transition and third-party access arrangement, must ensure that the industrial tariff rate remains competitive and attractive in the region.
