Gas tariff revised upwards for non-power sector

By ALIFAH ZAINUDDIN

GAS Malaysia Bhd has made an upward revision to the natural gas tariff for Peninsular Malaysia’s non-power sector to RM28.05 per one million British thermal units (mmBTU).

The natural gas distribution company noted in a financial filing last Friday that the government has approved the price adjustment for the July-December 2017 period, as prescribed under the Incentive-Based Regulation (IBR) framework.

However, under the gas-cost- pass-through (GCPT) mechanism, a rebate of RM1.59 per mmBTU will apply to all tariff categories over the same period.

This results in an average effective tariff of RM26.46 per mmBTU, a 0.57% increase from the previous average effective tariff of RM23.61 per mmBTU.

The IBR framework sets the base tariffs for a regulatory period of three years from January 2017 and allows changes in the gas costs to be passed through via the GCPT mechanism every six months.

The amendment will see residential consumers pay RM18.64 per mmBTU from the existing RM19.26 per mmBTU.

On the other hand, non-residential consumers who consume up to 600mmBTU per annum will pay a tariff rate of RM24.52 per mmBTU compared to the current RM24.86 per mmBTU.

Gas Malaysia said while the tariff revision has no material impact on its business operations, the higher tariff is expected to contribute positively towards the financial position of the company for the financial year ending Dec 31, 2017.

On Dec 28 last year, the government had ratified Gas Malaysia to bring into effect the revision of the natural gas tariff from Jan 1, 2017, until Dec 31, 2019.

As such, the base tariff per mmBTU is predetermined at RM26.71 for the period between January 2017 and June 2017; followed by RM28.05 (July-December 2017); RM30.90 (January-June 2018);

RM31.92 (July-December 2018); RM32.69 (January-June 2019); and RM32.74 (July-December 2019).

Malaysia’s power sector generates about 17,000MW of electricity from various sources — coal- fuelled and gas-fired power plants, hydroelectric, renewable energy and others.

Speaking at The Malaysian Reserve’s Third Green Growth Roundtable on “Powering Malaysia: Transitioning Towards Clean Energy” last month, Energy Commission chairman Datuk Abdul Razak Abdul Majid said the government will continue to favour a mix of power generation sources to ensure the country’s power security.

Abdul Razak said the government will not depend, nor put a high percentage on one energy source, adding that the country aims to reach 2,000MW of electricity from solar energy in three to five years.

Nevertheless, he said the challenge is in the higher cost and whether the public will be able to accept such rates.