Gas price hike adds RM200m annually to iron and steel industry's cost: Misif

PETALING JAYA: The Malaysian Iron and Steel Industry Federation (Misif) said the impending gas price hike would mean an additional cost of about RM200 million per year for the industry, notwithstanding the additional costs already suffered from the earlier five tariff increases, all within a short period of time. “Over the last four years, the natural gas tariff has increased six times, from RM16.07 per MMBtu to RM32.52 per MMBtu, a staggering increase of RM16.45 per MMBtu or 102%.
This is extremely difficult for any industry to endure, what more energy-consuming manufacturing entities in the iron and steel industry,” Misif said in a statement today.
It added that the increase in natural gas price and the consequent effect on higher production cost would invariably affect the viability and competitiveness of the domestic iron and steel industry.
Misif said burdening operating cost has been continuously rising due to the relentless hikes in electricity and natural gas tariffs; Minimum Retirement Age Act 2012; GST since April 2015; Minimum Wages Order 2016 (planned increase next year); mandatory annual health checks for foreign workers; Employment Insurance Scheme and Employer Mandatory Commitment from 2018; and duty drawback mechanism (Import for export) (wastage and imposition of GST).
Misif urged the government to consider special tariff arrangements on the energy needs of the domestic iron and steel industry and moratorium to maintain natural gas price at the rate RM26.31/MMBtu for a period of at least two years.