KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) said this is not the right time to impose any upward revision of the electricity tariff, especially for the manufacturing sector.

Its president Tan Sri Soh Thian Lai said that while the federation is grateful for the one-year extension where the base tariff and imbalance cost pass-through (ICPT) rebate were maintained throughout 2021, “many industries are still in a vulnerable position as they continue to recover from the Covid-19 pandemic.”

“As it is now, industries are already struggling with inflationary pricing on almost all business costs and would struggle to deal with higher prices of energy, which would also have a cascading effect on other cost items, especially raw materials that may further increase inflation,” he said in a statement today.

“If operation costs continue to increase, manufacturers may need to make some adjustments to their operational costs either by increasing the product prices which is the last resort due to the competitive market or other cost rationalisation strategies, such as reducing administrative and personnel expenses, including freezing hiring which would derail business recovery efforts,” he added.

He stressed that “manufacturers’ ability to absorb higher operational costs in this current fragile period is very limited.”

FMM reiterated that any base tariff review should also address the long-standing cross-subsidisation in the electricity tariff categories towards creating more energy efficient and sustainable energy usage in the country.

“Due considerations should be given to the energy intensive but efficient companies as well as companies that have invested in energy efficient and renewable energy initiatives in line with the government’s commitment to reduce greenhouse gas emissions.

FMM said it is appealing to the government “to defer any upward increase in electricity tariff preferably until the global supply chain constraints have eased and commodity prices normalise as the manufacturing sector, which makes up approximately 37 per cent of TNB’s electricity sales, is also faced with other challenges to support their recovery, including manpower shortages, export constraints due to the higher freight rates, etc.”

“FMM also calls for the effective date of any tariff review to factor in sufficient time for the industry, especially exporters, to adjust accordingly,” Soh added. — Bernama