Malaysia says finalising power tariff review

By Friday May 27th, 2011 No Comments

May 27 (Reuters) – Malaysia is finalising a review on power tariffs and will make an announcement in the near future, the energy ministry said on Friday, amid speculation rates are set to rise after three years as the government looks to cut its bulging subsidy burden.

The National Economic Council, a government body, met on Friday to discuss the issue, the ministry said.

“However, the matter still needs to be refined and an announcement on this will be made in the near future,” it said in a statement without elaborating.

The study on power tariffs is part of a plan to review subsidies that are expected to double to almost $6.9 billion this year, which could derail the government’s plan to cut its fiscal deficit to 5.4 percent of GDP in 2011.

Prime Minister Najib Razak’s government is treading carefully in the subsidy review, for fear that a rise in fuel or electricity tariffs could trigger widespread price increases that would anger voters.

Najib, who chairs the National Economic Council, declined to comment when asked about the outcome of the meeting to deliberate power tariffs.

“Many people do not really understand that this (subsidy rationalisation study) is not about reducing subsidies but about reducing the rate of increase in subsidies because subsidies will continue to be given but they are increasing from 11 billion ringgit to about 20 billion ringgit,” he told reporters after a political party meeting.

“This means we have to find an estimated additional 8 billion ringgit, not a small amount.”

Najib has pledged to find ways to maintain fuel prices for as long as possible to ensure consumers are not burdened, after the authorities held off on a fuel price hike on Wednesday. [ID:nL3E7GR04I]

The last electricity tariff increase was in 2008 when national power producer Tenaga Nasional raised the rate by 24 percent.

Tenaga’s shares ended up 4.4 percent at 6.58 ringgit on Friday, lagging the broader market’s 7.8 percent rise. ($1 = 3.061 Malaysian Ringgit) (Reporting by Liau Y-Sing and Razak Ahmad; Editing by Ramthan Hussain)

Source : Reuters

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