“Gas Malaysia recently announced that the gas price to industries would go up by RM2.03 per million British thermal unit (MMBtu) from July 1 this year.”
MISIF accuses Gas M’sia of profiteering
The Malaysian Iron and Steel Industry Federation (MISIF) has accused Gas Malaysia Bhd of excessive profiteering in Peninsular Malaysia.
In a statement, MISIF president Datuk Soh Tian Lai expressed the federation’s disappointment and concern following Gas Malaysia’s announcement to increase the price of natural gas.
Gas Malaysia recently announced that the gas price to industries would go up by RM2.03 per million British thermal unit (MMBtu) from July 1 this year.
“This represents an increase of about 10 per cent from RM19.77 MMBtu to RM21.80 MMBtu for industrial users, including steel producers in Peninsular Malaysia,” said Soh.
He added that Gas Malaysia had a monopoly on natural gas supply to the industrial users in the country and recorded sterling profits of above RM160 million continuously for the past three financial years up to 2014.
“With such excellent earnings, we view the recent price increase as not only unjustified but also smacked of excessive profiteering. This should warrant an immediate investigation by the Ministry of Domestic Trade, Cooperatives and Consumerism on Gas Malaysia to curb such unhealthy activity.” Soh said.
Soh stressed that the price hike comes at an inopportune time, especially so soon after the implementation of the Goods and Services Tax (GST) in April, that has brought adverse impact on the cost of doing business in relation to financial cash flow of businesses.
“There is no justifiable reason for Gas Malaysia to increase the gas price as the international natural gas price is currently traded at only US$2.84/MMBtu (RM10.70/MMBtu) at NYMEX (New York Mercantile Exchange).
“Moreover, the NYMEX natural gas price was US$4.53/MMBtu one year ago, a drop of 37.3 per cent year-on-year (YoY) as compared to Gas Malaysia’s tariff, which increased from average tariff of RM19.32/MMBtu to RM21.80/MMBtu, an increase of 12.8 per cent,” said Soh in explaining that the domestic natural gas pricing is actually moving against the world trend.
The steel industry is an energy intensive industry that consumes around 5 to 7 MMBtu natural gas for each metric tonne of steel making/rolling activity.
Thus, this recent announcement would mean an average three to four per cent increase in the total production cost, with additional cost of about RM100 million per year to the steel industry, he said.
The industry would have difficulties in passing the increase in costs to end-users as the latter might opt to import to maintain their competitiveness, stressed Soh.
Soh noted as well that the local industry is already facing fierce competition from imported steel products from all over the world, especially China, and there has been severe influx of imported iron and steel materials into the country.
“The increase in natural gas price will adversely affect our competitiveness in the international markets and would severely jeopardize our exports of steel products as iron and steel industry is regarded as strategic to the country,” he added.
Read More : http://www.nst.com.my/node/87989 (NST 19/6/2015)
