Facing more than 40% rise in electricity cost, steel players seek review of new ICPT surcharge

KUALA LUMPUR (Dec 27): The iron and steel industry is appealing to the government to review the new electricity tariff adjustment that it announced a week ago, which will result in medium- and high-voltage users facing a "drastic" increase in the imbalance cost past-through surcharge from 3.7 sen per kWH to 20 sen per kWH.

"The net impact of this increase will be more than 40% for industrial users over the next six months," said the Malaysian Iron & Steel Industry Federation in a statement. It was referring to the period during which the new surcharge will be implemented.

With the tariff hike, it forecast that the steel industry’s annual electricity cost, which is estimated at RM1 billion in 2022, would rise to more than RM1.5 billion under the new tariff structure. Depending on the steelmaking route, both steelmaking and rolling processes consume up to 650 kWh electricity to produce one tonne of steel product, it said.

This will gravely impact the industry that has already been in doldrums since the price collapse of steel prices in April this year, it said, with a sharp decline in demand both domestically and internationally.

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