KUALA LUMPUR: There will be no hike in the electricity tariff in Peninsular Malaysia, Sabah and Labuan until the end of this year, following the latest review of the imbalance cost pass-through (ICPT) mechanism.

In a statement yesterday, the Energy, Green Technology and Water Ministry (KeTTHA) said the ICPT rebate of 2.25 sen per kilowatt-hour (kWh) for Peninsular Malaysia and 1.20 sen per kWh or 3.5% average downward revision of tariff for Sabah and Labuan will remain for the July to December 2015 period.

It added that the decision applies to all categories of consumers except for domestic consumers with monthly consumption of 300kWh and below.

Meanwhile, in line with the government’s initiative to rationalise power subsidies, the ministry has decided to increase the price of piped natural gas (PNG) in the peninsula by RM1.50 per million British thermal units (MMBtu) to RM16.70 per MMBtu from RM15.20 per MMBtu from July 1, 2015.

“In other words, the increase in fuel price will not impact the electricity tariff and the said rebate will able to continue, thanks to the RM1.08 billion cost saving from ICPT for the January to June 2015 period,” KeTTHA said.

“This sum also includes the RM300 million cost saving from the renegotiation of power purchase agreements with first generation independent power producers,” it said.

The ICPT is a mechanism implemented on Jan 1, 2014, which allows the government to pass excessive fuel costs to consumers.

KeTTHA said the cost saving in the peninsula also resulted from the higher usage of coal-fired power, for which prices are relatively lower compared with fuel such as PNG and liquefied natural gas.

As the ICPT has not been implemented in Sabah and Labuan, KeTTHA said the federal government will continue to subsidise the fuel cost and electricity tariff, estimated to amount to RM685 million this year for these two areas.

The next review will be in January 2016.

Tenaga Nasional Bhd’s (fundamental: 1.3; valuation: 1.8) shares fell 22 sen or 1.72% to close at RM12.56 yesterday, with 13.38 million shares done. It has a market capitalisation of RM72.13 billion.

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This article first appeared in The Edge Financial Daily, on June 26, 2015.