Bekalan gas susut, harga elektrik bakal meningkat, kata Rafizi

Malaysia must accelerate development of new energy sources and manage domestic gas supply balance to reduce pressure on electricity tariffs, former Economics Minister Rafizi Ramli said. He warned that the country's heavy reliance on coal-fired power generation and inadequate domestic gas supply may lead to further increases in electricity tariffs over the next five years.

Rafizi emphasized that the issue is not limited to Tenaga Nasional Berhad (TNB) or electricity bills, but rather an urgent energy security challenge. The problem is national, he added in a recent podcast interview. Malaysia's power generation system was designed decades ago when the country had abundant gas supply, but now domestic gas production is insufficient, leading to increased dependence on liquefied natural gas (LNG) imports.

Gas price spikes, with LNG prices rising from around RM46 per million British thermal units (MMBtu) to between RM70 to RM80 per MMBtu during disruptions in the Hormuz Strait, show that domestic gas supply is not sufficient to meet the electricity sector's demand, even at around 800 million cubic feet per day. Rafizi stated that Malaysia needs to import gas, meaning that the gas balance issue has become a problem.

The recent government decision to reduce electricity bills should not be seen as a long-term solution, he warned. Prime Minister Anwar Ibrahim recently announced expanded electricity subsidies for domestic users, increasing the free allowance from 600kWh to 800kWh per month starting this month until the end of the year. While this measure aims to protect domestic users, Rafizi cautioned that the underlying issue will become more serious as domestic natural gas production continues to decline, increasing Malaysia's dependence on imports for energy needs.

Electricity in Malaysia is mainly generated from coal, gas, and renewable energy sources. Current data shows that coal contributes about 57.9% of electricity generation, followed by gas at 34.9%, while hydro and solar contribute 4.7% and 2.5%, respectively. Rafizi emphasized that Malaysia cannot continue relying on coal as a long-term solution while acknowledging the government's commitment to achieving a carbon-neutral economy by 2050.

He noted that high-carbon energy generation can also subject Malaysia to carbon taxes in markets such as Europe, Japan, and South Korea, potentially undermining its competitiveness in the global market. At the same time, he stressed that carbon-intensive electricity generation cannot be entirely replaced by solar power due to land constraints, battery storage limitations, financing challenges, and slow-paced rooftop solar panel installation.

Rafizi made this statement as the government is also examining the potential of nuclear power in Malaysia's future mixed energy mix. Deputy Prime Minister Fadillah Yusof announced in March that MyPOWER Corporation Malaysia is conducting a comprehensive assessment of the feasibility of a nuclear power program in Malaysia, including infrastructure development, regulatory framework, licensing, project viability, stakeholder engagement, and human resource development.

Rafizi acknowledged that a greater reliance on LNG imports will lead to increased cash outflows due to purchases in U.S. dollars, putting pressure on the ringgit if Malaysia needs to spend billions of ringgit annually for LNG imports. He warned that dependence on LNG imports will also weaken Malaysia's energy independence, citing the example of European dependence on cheap Russian gas before the Russia-Ukraine war.

Rafizi warned that this burden will ultimately be borne by consumers as the government cannot provide subsidies indefinitely to cover electricity costs. He emphasized that the AFA mechanism needs to be understood in a broader context because electricity prices may face more pressure from changes in fuel prices and exchange rates.

Rafizi concluded that the shortage of gas, rising import costs, and the shift from coal require Malaysia to accelerate the development of renewable energy and manage the balance of domestic gas supply in the long term.