KUALA LUMPUR (Dec 30): Local industries are concerned about the impact of possible cumulative gas price that could increase 22.6% by the end of 2019 amid global economy uncertainty in the next few years.

Federation of Malaysian Manufacturers (FMM) recognises the Gas Cost Pass-Through (GCPT) mechanism is in place and that the average base tariff, which takes into account the rise in liquefied natural gas volume of import and foreign exchange fluctuations, would be adjusted according to the GCPT announcement for the relevant period.

However, it hoped the government would continue to consider industries' competitiveness vis-à-vis regional competitors in the energy subsidy rationalisation.

"While FMM welcomes the announcement on the natural gas tariff rebate of 40 sen per mmBtu (million British thermal units) for January to June 2017, industries have raised concerns on the impact of possible cumulative gas price increase of 22.6% by end of 2019 amid the uncertainty in the world economy in the next few years," it said in a statement today.

It hoped the government would look at the proposed transition to market price and assess the impact of price reviews against the prevalent economic and market conditions.

On Dec 28, Gas Malaysia Bhd announced that an incentive based regulation will be used to fix the natural gas tariff for the non-power sector in Peninsular Malaysia for a three-year period beginning Jan 1, 2017.

Under the framework, the company would allow changes in the gas costs to be passed through via the GCPT mechanism every six months.

Gas Malaysia said based on the GCPT mechanism, a tariff rebate of 40 sen/mmBtu will apply to all tariff categories for the period beginning January to June 2017.

This translates to an average effective tariff of RM26.31/mmBtu, which is a reduction of 2.74% from the current average tariff.

Meanwhile, following the changes in framework, a unified base rate for natural gas of RM26.71/mmBtu will be charged across all categories in the first half of 2017, before being increased to RM28.05/mmBtu in the second half.

In 2018, the base rate will be raised to RM30.90/mmBtu in the first half and further increased to RM31.92/mmbtu in the second half.

For 2019, the base rate will be raised to RM32.69/mmBtu in the first half and RM32.74/mmBtu in the second half.

In the meantime, FMM said it would continue advocating fair pricing of natural gas, in particular for the locally sourced piped gas.

"(FMM will also) seek further engagement with the government to obtain further clarity on the basis of the average base tariff determination for the next three years," it added.