FMM Wants Govt to Review Energy Policy

THE Federation of Malaysian Manufacturers (FMM) said the manufacturing sector only uses about 12 per cent of natural gas as fuel while the bulk is used by the power sector.

As such, it is the power sector that gets the majority of the subsidy provided by Petronas from the sale of cheap natural gas.

The federation said the manufacturing sector uses only 11.6 per cent of natural gas compared with the power generation sector’s 62.5 per cent.

“This represents only five per cent of total gas production in Malaysia. And as at March 2007, only 637 manufacturers are customers of Gas Malaysia Sdn Bhd,” FMM said in a statement yesterday.

Energy fuels available to the manufacturing sector range from traditional fuels such as diesel, heavy fuel oil and liquefied petroleum gas to more reliable, energy efficient and green energy alternatives like natural gas, renewable energy and biofuels.

In recent years, natural gas is the preferred energy source in the manufacturing sector mainly because it is the most efficient for direct heating.

Sectors considered as heavy users of natural gas are ceramics, oleochemicals, glass, petrochemicals, rubber gloves and iron and steel. Some manufacturers also use natural gas as feedstock.

However, not all manufacturers have access to natural gas because the distribution network is limited to those near the main pipeline along the coast or near power plants in the peninsular, it said.

FMM said an increase in natural gas pricing will hit manufacturing at least twice – directly through natural gas and indirectly through electricity tariffs as the power sector is expected to pass through its costs to consumers, in particular industrial consumers.

It argues that TNB already receives the bulk of its income from industrial users.

“Hence, while we are aware that there is a need to review natural gas prices, the manufacturing sector is asking the government for fair, equitable and transparent energy pricing and supply policies that take into consideration operation efficiency and give adequate time to make adjustments. We must look at the combined effect of price increase and supply,” said FMM.

“In this respect, efficient energy users like manufacturing should not be penalised with higher energy pricing, whether for natural gas or in electricity tariffs,” it added.

FMM wants Malaysia to review its energy policy. “It is timely for the Government to review the country’s energy policy as roughly half of the natural gas available is exported on long-term contract basis, while domestically we are short of gas.

“The energy policy therefore has to distinguish between political expediency and economic efficiency; and energy as utility and energy as commodity. The policy has to ensure long-term sustainability by supporting value-added activities and reward energy efficiency and conservation,” it said.

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