KUALA LUMPUR: The iron and steel industry will see an increase in production cost from RM855 million to RM1 billion once the electricity tariff hike takes effect in March next year, says the Malaysian Iron and Steel Industry Federation (Misif).
The industry group said the increase in the electricity tariff for industrial users would result in higher production costs which would work against the local industry players.
“We are concerned that the plight and trepidations of the industry have hardly been taken into serious consideration despite numerous engagements with the Energy Commission, Tenaga Nasional Bhd (TNB) and ministries such as the Ministry of International Trade and Industry and Ministry of Energy, Science, Technology, Environment and Climate Change.
“Being an energy intensive industry, electricity is an essential utility, besides natural gas, and represents the second highest production cost component after raw materials for the iron and steel industry,” it said in a statement yesterday.
Misif also said industry players were striving to manage these challenges while containing their costs to enable them to compete competitively with other regional producers.
“The iron and steel industry encountered the worst onslaught of cheap imports for the last five years.
“While barely recovering, the industry has experienced a slowdown that was aggravated by sentiments resulting from the US-China trade war, as well as intensifying competition from other regional producers and dominant foreign players at home,” it said.
Misif expressed strong hopes that the relevant authorities would halt the continuous increase in electricity prices and any efforts to defer or mitigate the hikes in electricity tariff, including disallowing any future increase in natural gas, would help safeguard the business against risks and vulnerabilities.
“This will be critical in maintaining our competitiveness which has far-reaching impacts on the viability and sustainability of an industry that is strategic to the economic development of Malaysia,” it said.
On Dec 14, TNB announced that it would raise the imbalance cost pass-through (ICPT) surcharge for non-household users from March 1, 2019 to offset rising costs.
The ICPT surcharge will increase to 2.55 sen per kWh from the current 1.35 sen per kWh. –Bernama
