KUALA LUMPUR (Dec 16): The government is implementing a targeted electricity subsidy which will see all domestic users continuing to enjoy the two sen per kWH rebate on their power tariff for the period between Jan 1 and June 30, 2023.

The government will also not increase the 3.7 sen per kWh surcharge on farmers and animal breeders as well as lower voltage (LV) non-domestic users such as micro businesses, and small and medium enterprises (including restaurants, groceries, bakeries and small workshops).

In contrast, medium voltage (MV) and high voltage (HV) users will be charged a surcharge of 20 sen per kWh from Jan 1, as a result of the high electricity generating cost due to the increase in coal prices globally.

Non-domestic users were charged 3.7 sen per kWh surcharge throughout 2022.

Announcing this on Friday (Dec 16), Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad said the government will continue to bear a total of RM10.76 billion in subsidy to maintain electricity tariff at the current rates for the domestic, LV and specific agricultural users.

"The actual cost of subsidy to maintain the current electricity tariff is RM14.91 billion. However, with this targeted subsidy scheme, an additional allocation of RM4.16 billion which would have gone to bear the cost of electricity subsidy can now be allocated to help the rakyat through other means," Nik Nazmi told a media briefing.

The minister said domestic users, farmers and animal breeders, and LV non-domestic users, will be exempted from the tariff hike after the latest adjustment on the electricity rates through the Imbalance Cost Pass-Through (ICPT) mechanism.

The government will allocate RM8.74 billion in subsidy to ensure these users are not subjected to any tariff increase following the adjustment.

For the July to December 2022 period, the previous government had allocated RM5.8 billion for electricity subsidy amid the escalating coal prices, which makes up nearly half of the country's fuel mix for power production, to recoup the RM7 billion of ICPT that had been spent by Tenaga Nasional Bhd to purchase coal and other fuel for the generation of electricity.

ICPT is a mechanism to ensure any additional fuel costs will be passed down to the end-users.