Association of Water and Energy Research Malaysia president S Piarapakaran said Malaysia now has limited options due to delays in implementing long-term energy reforms.

He stressed that transparency in cost pass-through for fuel and electricity is critical to maintaining public trust and avoiding economic distortions.

“This is to ensure trust and prevent cross-subsidy. For example, high cost diversion into the business sector will increase the cost of goods and services, which will impact living costs,” he said in a statement.

Additionally, Piarapakaran, who is also CEO of the Centre for Water and Energy Sustainability, urged Putrajaya to consider suspending the Automatic Fuel Adjustment (AFA) mechanism and temporarily reverting to the ICPT mechanism to better manage electricity price volatility.

He added that a hybrid approach could also be considered as a temporary stabilisation measure.

“Alternatively, the government can opt for a three-month AFA/ICPT implementation to keep electricity pricing stable as a temporary move,” Piarapakaran said.

He noted that increased hydropower generation had been implemented successfully in the past during favourable weather conditions.

However, he said this approach would depend on rainfall levels as weather patterns are uncertain due to the possible return of El Nino – a weather pattern referring to reduced precipitation in Asia resulting from the warming of waters in the Pacific Ocean.