Small and Medium Enterprises Association of Malaysia (SAMENTA) is alarmed with the recent announcement of a hike in electricity bill for commercial and industrial users.
The hike, described as a ‘surcharge’ under the Imbalance Cost Pass-Through mechanism, can be called by whatever name, but it is going to hamper the recovery of our SMEs, said SAMENTA Central chairman Datuk William Ng.
From Energy Commission and Tenaga Nasional’s own numbers, more than 1.6 million commercial and industrial users will be paying between 11.8 to 18.4 percent more for electricity from 1 February 2022, he added.
For most SMEs, especially those in the manufacturing sector, electricity is the second or third largest cost factor, behind raw materials and labour costs. A hike of up 18.4 percent in utilities bill for a business that’s running at sub-10 percent margin could mean a reduction of between 20 to 40 of its profit, and could even mean a difference between making and losing money.
“While we can understand the need for periodic adjustments in prices, we cannot accept the quantum or the timing of it, especially since Tenaga Nasional reported a 9.6 percent and 4.6 percent jump in revenue and earnings respectively for the 9 months ending 30 September 2021,” Ng said.
Tenaga Nasional’s CEO, Dr Ir Baharin Din was quoted as saying that “… demand is expected to improve in the coming months and into next year (2022) as more economic activities open for business”.
As such, by Tenaga Nasional’s own admission, the national utility company will be doing better in coming months, and there are no reason for the steep hike, especially since it is aspiring to cut down its reliance on coal in its portfolio from 45 percent in 2021 to 10 percent by 2035, with the costs of coal stock chiefly blamed for this decision for the steep hike.
Ng added: “We urge Prime Minister Dato’ Sri Ismail Sabri Yaakob to step in to rescue our
ailing SMEs as he has promised to. If the hike must be allowed, then we urge the Cabinet to consider a far lower quantum of increment without affecting Tenaga Nasional’s continued profitability or it’s ‘resilient performance’.”
Increase in prices of goods imminent
While SAMENTA have urged and will continue to urge its members to refrain from raising prices despite this steep hike in electricity bill and costs of raw materials, Ng said one must also understand that most SMEs are already operating on a razor thin margin and are struggling to find their footing amidst the pandemic.
“If the proposed hike continues as planned, it will be difficult, if not impossible, for businesses to absorb the increased costs without passing them partially to the consumers, just as Tenaga Nasional is doing,” said Ng.