KUALA LUMPUR, June 21 2018 : The Malaysian Iron and Steel Industry Federation (Misif) has called for the government to consider a moratorium to maintain natural gas price at RM32.52 per one million British thermal unit (mmBtu) for a period of at least three years.
The government should take heed of special tariff arrangements on the energy needs of the domestic iron and steel industry, it said in a statement today.
It said this in response to the new rate for natural gas as announced by Gas Malaysia Bhd on June 13, 2018.
Gas Malaysia said the effective average natural gas base tariff will be revised upwards by RM0.17 per mmBtu or 0.52 per cent from RM32.52 per mmBtu to RM32.69 mmBtu for the non-power sector, including steel producers, in Peninsular Malaysia from July 1, 2018 to Dec 31, 2018.
The new rate is inclusive of a surcharge of RM0.77 per mmBtu under the Gas Cost Pass-Through (GCPT) mechanism applied to all tariff categories due to the higher liquefied natural gas price against the reference price in the base tariff during this period.
“Over the last four years, the natural gas tariff has increased eight times, from RM16.07 per mmBtu to RM32.69 per mmBtu, a staggering increase of RM16.62 per mmBtu or 103 per cent,” said Misif.
The alarming increase over the last four years was too much for the industries to bear especially the iron and steel industry which consumed the most natural gas in their process,” it said, adding that energy issues related to the steel industry had been regularly highlighted in its numerous engagements and dialogue with the Energy Commission and Gas Malaysia.
“The continuous increase in electricity and gas price will render the Malaysia Iron and Steel Industry uncompetitive in the international market,” it said.
Electricity and natural gas were essential utilities for making steel products and represented the second highest production cost component, it added.
It said the steel industry consumed about two mmBtu per tonne of natural gas for each tonne of steel making/rolling activity, while the additional gas cost incurred by the iron and steel industry was estimated to be more than RM107 million under the new tariff against the applicable rate in May 2014. – Bernama