Che Khalib: Accept reality of subsidy, depleting gas

Thestar: Friday June 4, 2010

TANJUNG MALIM: Subsidy reduction for gas is a reality Malaysians must accept in the face of depleting natural gas resources and rising costs, says Tenaga Nasional Bhd (TNB) chief executive officer Datuk Seri Che Khalib Mohamad Noh.
The current subsidy Malaysians were enjoying was not a sustainable structure, he said.
Minister in the Prime Minister’s Department Datuk Seri Idris Jala recently said Malaysia would be bankrupt by 2019 if it did not cut subsidies and reduce borrowings.
During the Subsidy Rationalisation Lab Open Day held last Friday, reducing gas subsidy and increasing electricity tariff were among the recommendations laid out to bring the country’s economy on solid grounds.
The move, however, is not expected to affect most households as it will only affect those consuming more than 200kWh of electricity.
The Government is expected to continue to subsidise the groups of people using less than 200kWh, representing about 56% of the population.
Speaking to Bernama after officiating TNB’s RM1.1mil new building for its Tanjung Malim Office yesterday, Che Khalib asked: “Are you telling me 56% of Malaysians belong to the group that you call hard core poor?
“No, I don’t think so. I think the Government is generous enough to come up with subsidy recommendation to maintain that 56% population still enjoy the subsidised tariff.”
Citing Petronas, Che Khalib said the country’s gas volume was expected to go down by 2016 and, despite this, Petronas would have to continue supplying for the industries and TNB. — Bernama
       “Come year 2016, it will have to import more gas into the country to ensure gas volume is sufficient to power up our power plants and also for the industries to use as well as to meet the growing demand,” he added.
At that point, the gas would be bought at market price and not at subsidised price, he said.      
“Petronas has to buy expensive and sell cheap?. (It’s) double jeopardy. I don’t think this is a sustainable structure at all,” he reiterated.
Therefore, people had to appreciate the proposal at the Subsidy Rationalisation Lab Open Day for a gradual increase and not an abrupt increase in prices to a level that would affect the economic structure of the country, he said.
However, people could debate on how much to be increased or when the subsidy could be removed gradually, such as within five or 10 years, he said.
These decisions could be debated but to go on to say that subsidies would remain forever, “I don’t think it is sustainable,” Che Khalib added.