Misif proposes special power tariffs for sector

PETALING JAYA: The Malaysian Iron and Steel Industry Federation (Misif) has urged the government to consider special tariff arrangements for the energy needs of the domestic iron and steel industry.
In a statement today, the federation also requested that the government consider a moratorium to maintain natural gas price at the rate of RM32.52/MMBtu, for at least three years.
Misif noted that the natural gas tariff increased eight times over the last four years, from RM16.07/MMBtu to RM32.69/MMBtu, reflecting an increase of RM16.62/MMBtu or 103%.
“The alarming increase over the last four years is too much for the industries to bear especially the iron and steel industry which consume the most natural gas in their process,” it said, adding that the continuous increase in electricity and gas price will affect the industry’s competitiveness in the international market.
Last week, Gas Malaysia Bhd announced a revision of the natural gas tariff for the non-power sector in Peninsular Malaysia whereby the effective average natural gas base tariff will be raised by 17 sen per MMBtu or 0.52% from RM32.52/MMBtu to RM32.69/MMBtu.
The upward revision will take effect from July 1 till Dec 31. The new rate is inclusive of a surcharge of 77 sen per MMBtu, under the gas cost pass-through mechanism.
“The steel industry consumes about 2MMBtu/mt of natural gas for each tonne of steel making/rolling activity. The additional gas cost incurred by the iron and steel industry is estimated to be more than RM107 million under the new tariff against the applicable rate in May 2014,” said Misif.
It said that the higher gas cost will result in higher production cost for the industry and would affect the viability and competitiveness of the industry.