KUALA LUMPUR: The government has agreed that all domestic users will not incur any tariff increase following the electricity tariff adjustment through the Imbalance Cost Pass-Through (ICPT) mechanism.
Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad said tariff increase would also not be implemented on lower voltage (LV) non-domestic users.
This group includes micro businesses as well as small and medium enterprises.
"For this category of users, the government allocates RM8.74 billion in subsidy.
"This follows the decision by the National Action Council on Cost of Living meeting on Dec 13 chaired by Prime Minister Datuk Seri Anwar Ibrahim, and the Cabinet mreting on Dec 14.
"To ensure that there are no increase in prices of food and agricultural products, users such farmers and animal breeders which is categorised as specific agriculture (tariff H) will also not incur any electricity tariff increase.
"The government allocates RM90 million in subsidy for this category of users," Nik Nazmi said in a statement today.
This means a total of nine million electricity users or over 90 per cent of users in Peninsular Malaysia will not be affected by the increase in fuel prices for electricity generation.
However, medium voltage (MV) and high voltage (HV) users among industry participants including multinational corporations will face a surcharge at the rate of 20 sen/kWj.
The government would subsidise RM1.93 billion in order to avoid a significant increase on the surcharge should it be passed on entirely to the users, he said.
"In total, the government allocates RM10.76 billion in subsidy to ensure this is done for the best interest of the nation.
"The actual cost of subsidy to maintain the current electricity tarrif is RM14.91 billion.
"However, with this targeted subsidy scheme, an additional allocation of RM4.16 billion which would have gone to bear the cost of electricity subsidy can now be allocated to help the rakyat through other means," said Nik Nazmi.
The minister added that global energy crisis had led to the rise in unprecedented pressure to the electricity energy industry due to the significant increase in fuel prices.
This resulted in soaring costs of electricity generation and the electricity tariff adjustment through the ICPT mechanism being at a high rate of RM7 billion from the period of January to June 2022, and RM16.16 billion from the period of July to December 2022.
"At the increased cost of generation, all electricity users in the peninsular could be charged a surcharge of 27 sen/kWj for the period of Jan 1 to June 30, 2023 which will increase the cost of living should it be passed down entirely to users.
"Meanwhile, should the whole cost of ICPT be subsidised, the government will have to bear a larger budget allocation and a great burden," he said.
He noted that the ministry was also committed to navigate the transition to sustainable energy usage, while balancing energy security, affordability, and environmental sustainability.