Electricity Tariff reductionshould not and need not be on the condition of Sarawak succeeding in getting the increase in oil and gas royalty. SESCO can afford lowering tariff by 30%

AdenanSatem was quoted in press today saying that if Sarawak succeeds in getting Petronas to increase oil and gas royalty, the Government will reduce the water and electricity tariffs.

In respond to this statement, it is the position of DAP Sarawak that the reduction of electricity tariffs need not and should not be conditional upon the State getting an increase of oil and gas royalty because of the simple fact that SESCO can afford it.

Our call for the reduction in electricity tariff is based solely on the ability and profitability study of Syarikat SescoBerhad (SESCO) to reduce the tariff.

In the financial year ended 31-12-2013, SESCO generated a revenue of RM2,312 million and made a pre-tax profit of RM408.5 million.

SESCO has 2 main categories of customers, namely:
1.       The normal customers who are paying the tariff of an average of RM0.30 per KwH.  These normal customers include all Sarawakians who are paying domestic, commercial or industrial tariffs. The tariff rates can be obtained in the SESCO website.
2.       The Special Customers who are the smelting plants in Samalaju who are paying tariff rates that are separately negotiated and agreed under separate agreements.  Their tariffs rate were kept as secrets by SESCO. For example, Tokuyama is paying a tariff of only RM0.11 per KwH, Press Metal is only paying a tariff of RM0.105 per KwH, etc.

In the financial year 2013, about 30% of the revenue of SESCO came from these Special Customers.  Forfinancail year 2014, at least 40% of the SESCO’s revenue will come from these Special Customers under special contracts for the supply of electricity. 

It isthe projection of the Sarawak government, as stated byAwang Tengah in DUN Sarawak that the committed electricity demand will increase by at least 25% from year 2013 to 2014. 

Committed Demand (MW)

Out of this increase, 90% will be for the sale of electricity pursuant to the special contracts with the industries in SCORE.

Our DAP’s campaign calling for reduction of electricity tariff is only in respect of the tariff paid by the normal customers of SESCO (including domestic, commercial and industrial tariff).  It will only reduce that part of the revenue from SESCO’s normal customers, without affecting the contractual rates under the special contracts with SESCO’s Special Customers.

Based on the figures above and some simple mathematics calculation, it is obvious that a30% reductionof the electricity tariff for the normal customers of SESCO (including domestic, commercial and industrial users) in Sarawakwill not cause any loss to SESCO.

Therefore, there is absolutely no need for the State government to rely on the increase in oil and gas royalty to lower the electricity tariffs in the State.

I urge the State Government not to find excuses to delay the lowering of the electricity tariff in Sarawak.  In light of the escalating costs of living, the State Government should lower the tariff to help ease the financial burden of the people, especially when it can afford.

Chong Chieng Jen
Member of Parliament for Bandar Kuching
ADUN for Kota Sentosa

DAP Sarawak Chairman, National Vice Chairman