Don’t expect drop in power surcharge to bring prices down

Consumers should not expect the reduction in power surcharge to lead to a drop in their spending.

PETALING JAYA: Businesses welcome the reduction in electricity surcharge for industrial and commercial users but rule out any possibility of price cuts for goods and services.

SME Association of Malaysia president Ding Hong Sing said electricity tariffs do not account for a significant portion of operating cost for most small and medium enterprises.

“It depends on the nature of the business but mostly it’s not more than 5% of total operating cost,” he told FMT.

“It would be unfair to say that prices (of goods and services) can be reduced as this (reduction) is not substantial,” he added.

Shaun Cheah, executive director of the Malaysian International Chamber of Commerce and Industry, agrees.

He pointed out that the drop in tariffs will only make a huge difference for businesses that consume a lot of power, such as cold storage warehouses.

Last Saturday, Prime Minister Anwar Ibrahim said the electricity surcharge for commercial and industrial users had been reduced from 17 sen/kWh to 16 sen/kWh to help bring prices of various goods down.

The new rates will be effective from now until Dec 31. Some 34,000 users are expected to benefit from it.

Cheah pointed out that the reduction is minimal and unlikely to offset increases in the cost of doing business.

“It may help to ease the burden on SMEs but not to the point where prices of goods can be reduced given that operating costs have been rising,” he told FMT.

Ding said the one-sen reduction is “nothing” compared with the surge in the price of diesel, especially with many businesses yet to get their application for the diesel subsidy fleet card approved.

“Some SMEs used to spend about RM3,000 a month on diesel but it has risen to RM4,500 a month (for those still waiting for their subsidy application to be approved),” he added.

The government has announced that businesses that have yet to receive their fleet cards may apply for a refund of the subsidy later.

However, there is a cap on the amount they can claim per month based on the types of vehicles they use.

The Federation of Malaysian Consumers Association (Fomca) sees the reduction in electricity surcharge as a good measure but only to keep prices at current levels.

Fomca CEO Saravanan Thambirajah told FMT that consumers should not expect it to have much of an impact on the market.