Electricity tariff hike could trigger inflationary ripple effect

If the government really requires more funds for social spending, as the PM claims, it should focus on making our taxation system more progressive

transmission tower under gray sky
An electricity transmission tower - PEXELS

Follow us on our Malay and English WhatsApp, Telegram, Instagram, Tiktok and Youtube channels.

Aliran is concerned about the impact on the cost of living arising from the government’s plan to raise the electricity tariff by July.

Although the PM has assured the public that the hike is only for “industry” and will not affect 85% of households, can the government guarantee that it will not worsen inflation and burden the public?

A higher tariff for industry will trigger a chain reaction, as businesses pass on any increase in costs to consumers.

The prime minister and the TNB CEO must explain clearly why TNB needs to raise tariffs when its profits have soared in recent times. In the first nine months of 2024, TNB’s net earnings rose to RM3.7bn – a 71% jump compared to the same period in 2023. Its turnover rose 7.5% to RM42.4bn.

So, why the need for a tariff hike?

Instead of raising the tariffs, Tenaga Nasional should slash its own expenditure. As a token, it should first start with the remuneration of its top echelon, who have enjoyed generous directors’ fees and benefits all these years.

Its directors received about RM7m for the financial year ended 31 December 2023 (including RM3.9m paid to an executive director) (See TNB Annual Report note 34 and Corporate Governance Report for 2023).

Non-executive directors receive RM20,000 per month in fees and a total of RM1.8m in benefits for the year (see ordinary resolution 18 passed at TNB’s annual meeting last May).

The government should order TNB to do ‘national service’ by getting it to slash the pay, allowances and benefits of its top echelon before raising tariffs.

Second, the government has to accelerate the transition to solar to reduce dependency on fossil fuels. This will not only ease the tariff burden on consumers but also help the nation meet its climate change targets.

The global energy think tank Ember states that Malaysia’s share of solar and wind energy is just 1.5% of total electricity generated. It pointed out that this is far below the global average of 13% and less than half the Asean average of 4.4% in 2023.

Countries with less year-round sunshine like the Netherlands (20.0%) and Germany (61.2%) show we have a lot of catching up to do.

For this, the government needs to introduce better incentives and subsidies for solar panel producers and the public. This will hasten the conversion to solar energy.

Finally, TNB should also review all its agreements with independent power producers.

We hope the government will consider the impact of any electricity tariff hike on the cost of living and not add to the people’s burden.

If the government really requires more funds for social spending, as the PM claims, it should focus on making our taxation system more progressive, eg higher income tax rates for uppermost bands and windfall profits taxes for companies.

Aliran executive committee
6 February 2025

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.
AGENDA RAKYAT - Lima perkara utama
  1. Tegakkan maruah serta kualiti kehidupan rakyat
  2. Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
  3. Raikan kerencaman dan keterangkuman
  4. Selamatkan demokrasi dan angkatkan keluhuran undang-undang
  5. Lawan rasuah dan kronisme
Support Aliran's work with an online donation. Scan this QR code using your mobile phone e-wallet or banking app:
Subscribe
Notify of
guest
0 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments