FMM calls for faster conclusion to access arrangement to liberalise Malaysia's gas supply market

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KUALA LUMPUR (Dec 4): The Federation of Malaysian Manufacturers is calling for the distribution access arrangement for the gas market, which covers last mile connectivity and has yet to be finalised, to be concluded soon in order for the gas market to be fully liberalised next year.

“With the gas market expected to be fully liberalised in 2020, industrial gas users have been looking forward to explore competitive gas prices with the entry of more gas suppliers via the third-party access mechanism.

“However, distribution access arrangement which covers the last mile connectivity has yet to be finalised as the year end approaches,” the federation’s president Tan Sri Soh Thian Lai said in a statement today.

Manufacturers, he said, have expressed “grave concerns” that the prolonged delay in finalising the distribution access arrangement and the one-sided gas supply agreement (GSA) by the incumbent supplier have made it difficult for gas customers to agree with the terms of the new GSA, or to explore supply negotiations with other gas suppliers.

“Among the grievances highlighted was that customers were not given the option to sign for a one-year contract, in addition to supply being terminated if the customer also procures from other suppliers.

“The supply agreement is also deemed ambiguous, given the lack of clarity on the additional surcharges that customers are subjected to and no details on the calculation of surcharges. In particular, customers are also exposed to onerous liquidated ascertained damages because of this one-sided agreement,” he added.

FMM, which is seeking clarity on the issue from the Government, stressed that the transition from monopolistic to open market must be done in an “equitable and transparent manner” to ensure fair and competitive market practices, for the benefit of end users.

So any acts or terms of supply that could reduce or restrict competition in the gas supply market should be pre-empted and addressed to ensure the protection of consumer interests in this liberalisation towards establishing a fair and efficient market, said Soh.

And FMM, he added, strongly feels that the timing for market liberalisation is important, and should be ideally done when gas price is comparatively low.