Declining gas production will drive up power prices, says Rafizi

Malaysia's electricity costs could continue to increase over the next five years as the country experiences a shortage of domestic gas, warns former economy minister Rafizi Ramli. This issue goes beyond Tenaga Nasional Bhd (TNB) or the burden of monthly electricity bills, according to Rafizi, describing it as a pressing energy-security challenge.

The former minister emphasized that Malaysia's power generation infrastructure was designed decades ago when the country had an abundance of gas, but now domestic gas supplies are insufficient, forcing reliance on liquefied natural gas (LNG) imports. Rafizi noted that gas pricing has soared sharply due to disruptions in the Strait of Hormuz, with Tier 2 gas prices surging from around RM46 to between RM70 and RM80 per million British thermal units (MMBtu).

This suggests that domestic gas supply is not enough to meet electricity-sector demand. Rafizi cautioned that measures to cushion electricity bills should not be seen as a permanent solution as the underlying problem will only worsen. Peninsular Malaysia's electricity supply is mainly driven by coal, gas, and renewables, with coal making up about 57.9% of electricity generation, followed by gas at 34.9%, and hydro and solar contributing 4.7% and 2.5% respectively.

Rafizi stressed that Malaysia cannot continue relying on coal as a long-term solution, as the country has committed to net zero emissions by 2050. He also mentioned that solar power cannot be scaled up quickly enough to fully replace coal due to land, battery storage, financing, and slow rollout of rooftop solar systems. Rafizi highlighted that Malaysia's gas shortages, rising import costs, and transition away from coal would keep electricity tariffs under pressure unless the country accelerates renewable energy deployment and addresses its long-term gas balance.