Power tariff pass-through can wipe out GST savings, Rafizi warns

PKR’s Rafizi Ramli says Putrajaya should review its approval for TNB to continue with the ICPT scheme until it can accurately gauge business response to the planned tax changes.

KUALA LUMPUR: PKR’s Rafizi Ramli today urged the government to reconsider giving approval to Tenaga Nasional Bhd (TNB) to maintain the imbalance cost pass-through (ICPT), claiming it will negate consumer savings from the removal of the goods and services tax (GST).

The former Pandan MP said while the ICPT was technically aimed at non-domestic users, he was concerned that firms may use this to avoid lowering prices following the zero-rating of the GST.

Rafizi said the next six months were an especially critical period that could determine public perception of the Pakatan Harapan (PH) government and undermine existing efforts to help the public deal with rising costs.

“If the GST is abolished and weekly price hikes are eliminated, but at the same time net power tariffs rise, businesses and industries will use this excuse (along with the sales and services tax in September) to not lower prices and adopt a wait-and-see attitude,” he said in a statement.

“This will erode public confidence in PH’s determination and sincerity in finding ways to aid the public, who opted to change the government in the hope of avoiding unwarranted price hikes.”

Rafizi said he had conducted simulations based on the announced ICPT rates and found they would effectively negate 50% of the cost savings resulting from the removal of GST.

He urged Putrajaya to review its approval for TNB to continue with the ICPT scheme until it can accurately gauge business response to the planned tax changes already announced.

Rafizi also suggested that the policy be suspended until PKR is able to communicate its concerns to the Cabinet.

TNB said in a filing with Bursa Malaysia last week that the Energy Commission had approved its continuation of the ICPT until the end of 2018.

The surcharge is applied at a rate of 1.35 sen/kWh on top of the base tariff of 39.45 sen/kWh.

It is applicable to non-domestic users and households that consume above 300kW/h monthly.

The ICPT permits TNB to shift increased energy generation costs to some consumers at a rate that is fixed for a period of six months and reviewed thereafter.