FMM reiterates call for moratorium on ICPT surcharge for electricity

THE Federation of Malaysian Manufacturers (FMM) calls for the government to consider its February 2022 appeal for a moratorium on the Imbalance Cost Pass Through (ICPT) surcharge for the next review period, second half of 2022 (2H22), until at least the review period of 1H23.

This request takes into consideration the six-month lag of the impact of fuel prices on the electricity tariff, in particular coal and natural gas, which have not moderated to a pre-Covid 19 level due to major disruptions to regional and global fuel markets and uncertainty caused by on-going Russia-Ukraine conflict.

FMM president Tan Sri Soh Thian Lai (picture) said local manufacturers are under tremendous pressure to contain the increasingly challenging high operating costs given the high inflationary pressures, increase in minimum wage, labour shortages, rise in transportation costs, global supply chain disruption and weakening ringgit.

“For example, the domestic food manufacturing industry is currently struggling to manage the various cost increases given that more than 50% of their raw materials are imported. 

“Given the highly interconnected global supply chains and markets for food and associated inputs, a small supply disruption in one region or sector would have dire consequences on another,” he said in a statement today.

The world has been experiencing surges in food prices since mid-2020 driven by the recovery in demand following the pandemic, adverse weather impacts on supply, trade restrictions by some countries on food products and the rapid rise of input costs such as energy and fertilisers. 

Tan also said that manufacturers’ ability to absorb higher operational costs in this current fragile period is very limited and would eventually have a cascading effect on consumer food items if there is no assistance to help curb some of the major input costs such as energy.

“We are proposing that the surcharge accrued during the proposed moratorium period could be spread out over several cycles of the subsequent tariff review period or off-set against the rebate for the subsequent review cycles, if any, until it is normalised.

“FMM would like to reinforce that given these many challenges faced, industries are in a very precarious position and thus this is not the right time to continue with the ICPT surcharge or pass through a higher surcharge rate,” he added.

Tan also said that FMM looks forward to engaging with the Energy and Natural Resources Ministry and the Energy Commission to discuss a more palatable solution. — TMR / pic TMR File