Posted on 22 Dec 2022
The Malaysian Iron and Steel Industry Federation (Misif) expressed concern over the sudden and perpetual increase in electricity tariff imposed on the iron and steel industry which is still in doldrums since the price collapse in April 2022.
It said in a statement today that the steel industry is facing a sharp decline in demand both domestically and internationally.
It added that medium-voltage and high-voltage users will face a drastic increase in Imbalance Cost Past Through (ICPT) surcharge from 3.7 sen/Kwh to 20 sen/Kwh. The net impact of this increase will be more than 40% for industrial users over the next six months.
In order to compete with imports and stay competitive in the international market, Misif said, the iron and steel industry is critically in need of a competitive energy cost. Depending on the steelmaking route, both steelmaking and rolling processes consume up to 650kWh of electricity to produce one tonne of steel product.
In order to avoid adding extra burden to the industry, which is already in a very precarious situation, and to avoid the industry having to pass on the high electricity cost down to customers, resulting in high inflation, Misif is appealing to the government to consider maintaining the current 3.7 sen ICPT surcharge for three months, from January-March 2023; increase of 6.3 sen/kWh surcharge for six months, from April to September 2023; increase 10 sen/kWh from October-December 2023; and moratorium of 1.6% contribution to the Renewable Energy Fund for the next six months for the categories of customers affected with the increase in surcharge.
The concern arose with the Minister of Natural Resources, Environment and Climate Change announcing on Dec 16 the Electricity Tariff Adjustment for Peninsular Malaysia for the period of Jan 1 to June 30 2023. This latest adjustment will translate into more than RM500 million per annum of additional electricity cost to the industry.
Misif estimates that the steel industry’s annual electricity cost of RM1 billion in 2022 will escalate to more than RM1.5 billion.
Source:The Sun Daily
