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Transparency sought in gas price hike

The Star Online, June 22, 2015
THE Federation of Malaysian Manufacturers (FMM) views with concern that the impending natural gas price increase from RM19.77 to RM21.80 per mmBtu on average effective July 1, would have a significant impact on the manufacturing sector, especially in these trying times with increasing cost of doing business, implementation of GST, uncertainty in global recovery affecting the export market and weakening of the ringgit. 

While FMM acknowledges the need to move with greater certainty towards market pricing and to rationalise subsidy for natural gas consumption, there should also be due consideration of the impact on businesses vis–à–vis prevalent economic conditions.  

FMM has therefore always advocated to the Government and its members that any increase in energy pricing, including natural gas, must be gradual and reasonable so that the impact to industrial consumers can be managed without adverse effects. In this respect, FMM has been urging the Government to adopt the following measures:

  • To maintain the timeline to achieve market parity to 2020 and facilitate a more gradual price increase;
  • To continually assess the impact of impending price reviews against prevalent economic and market conditions, affecting business competitiveness;
  • To review the gas pricing mechanism of LNG to reduce the lag effect to no more than three months so that consumers can experience lower global oil and gas prices faster and remain competitive;
  • To be more transparent in the gas cost pass through mechanism so that industry is able to understand price review exercises. In this respect, FMM is prepared to work with the Energy Commission to simplify the mechanism; and
  • To maintain or increase the quantum of local piped gas to industry through greater efforts and investments in exploration and production.  

FMM is of the view that the increase to RM21.80 per mmBtu could be reviewed and reduced by capping the quantum of pass through gas costs to a more manageable level.  

President, FMM

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