The Malaysian Consortium of Mid-Tier Companies (MCMTC) appeals to our Prime Minister YB Datuk Seri Anwar Ibrahim for a review of the electricity hike as announced on 16 Dec 2022 by the Minister of Natural Resources, Environment & Climate Change (NRECC). We fully support our PM and his handpicked Ministers in prioritising the rebuilding of Malaysia in a clear and transparent manner.
We are taking the risk to openly share our thoughts as we rebuild and be more resilient in the face of even more challenges. The Minister of NRECC, YB Tuan Nik Nazmi Nik Ahmad, announced an electricity tariff adjustment on the Imbalance Cost Pass-Through (ICPT) from 3.7 sen to 20 sen for the medium and high voltage users. That is a massive 440% increase and not the gradual increase announced by the Prime Minister on 15 Dec 2022. This big increase has a tremendous impact on the players in the Mid-Tier Corporations (MTCs). The MTCs, just like the local SMEs has have been hit with increased costs in the form of higher minimum wages, shortage of labour, huge raw materials, price increases and bank interest rates hikes.
At the same time, we incur additional compliance costs as we work to counter stiff external global competition, such as from China exporters, who are slashing prices to keep their factories in operation. The MTCs needs more time to recover and to regain strength. 2023 is widely reported to be another challenging year globally. Our National Utility TNB, however, is operating in a protected environment. Being the single player, there is no other competitor in this captive market and a quick check of their latest published report on the first 9- months Financial Year 2022 (S.A. 2022/11/23_90 (HQ)) revealed: “Earnings before interest, taxes, depreciation, and amortisation (EBITDA) were reported higher at RM16.31 billion as compared to RM14.39 billion in the same period last year. EBITDA margin (without ICPT cost recovery) improved to 43.0% from 40.4% last year, reflecting an improvement in TNB’s operational performance.”
Furthermore: “In spite of the current high fuel price cost environment, the ICPT mechanism under the Incentive Based Regulation (IBR) allows TNB to remain neutral as it allows the Group to pass through any variations in generation cost in the form of rebates or surcharges.” It makes one wonders if, without the hard-working Industry (the manufacturers and exporters), our National Utility would have been able to achieve as they reported: “Group revenue without cost recovery of the Imbalance Cost Pass-Through (ICPT) for the period increased by 6.6% to RM37.95 billion from RM35.59 billion, attributed to the increase in TNB sales of electricity in all sectors”?
We appeal to our PM to re-consider the sharp increase to 20sen announced by YB Tuan Nik Nazmi Nik Ahmad. Please allow us some breathing space to focus on rebuilding the economy and not to derail it.
Callum Chen President, MCMTC
About MCMTC: The MCMTC (Malaysian Consortium of Mid-Tier Companies) comprises MTCs (Mid-Tier Companies) from all industries. The MTCs form 1.7% of total companies in Malaysia and employ 16% of the total workforce, but contribute 39.9% of Malaysia’s GDP. Get in touch with us here.