Wednesday, September 4, 2013

Why hit at consumers, why not IPPs?

FMT Staff

September 4, 2013
In the 2012 Budget, Independent Power Producers were given RM8 billion subsidy, so why didn't the federal government touch them first.
KOTA KINABALU: Sabah opposition has questioned the Prime Minister’s rationale in hiking RON95 and diesel prices which directly affect baseline consumers when the federal government could have instead cut subsidies to Independent Power Producers (IPP) as its first measure.
State party assistant secretary Junz Wong said that cutting back on subsidies on fuel would only earn the federal government RM1.3 billion while a reduction on IPP would allow the administration to save RM3.3 billion a year.
Wong said in 2012 budget, IPPs were given RM8 billion as subsidy.
“IPPs are mostly public-listed companies such as YTL Power and Powertek etc which recorded a profit of RM1.6billion on revenue of RM13billion and RM450million on revenue of RM1.34billion respectively.
“By cutting IPP subsidy the federal government will be able to save more than RM3.3billion a year.
“So it only makes more sense to do this…why cut rakyat subsidies?
“Najib should cut other subsidies first to prove his “Rakyat didahulukan” slogan is not just an election war cry!” Wong said in a statement today.
The petrol and diesel price hikes, announced by Najib on Monday were part of the federal government’s subsidy rationalization measures to cope with the declining current surplus.
Fitch Agency today reportedly gave the move a thumbs up but noted however that it was “too small to alter the negative outlook on Malaysia’s ‘A-’ sovereign rating.”
Fitch said the measures are consistent with its fiscal projections and are credit-neutral over the near term, while the fuel subsidy reduction is a first, small step ahead of possible additional measures to shore up public finances.
Fitch had earlier downgraded the rating’s outlook to negative from stable on concerns of the government’s ability to contain and lower its budget deficit.

Spiralling effect in Sabah

Meanwhile a stumped Wong, who is also Likas assemblyman, refuted Kinabatangan MP Bung Mokthar’s claim that a rise in petrol and fuel prices won’t affect the rural villagers in Sabah.
“Does Bung not know almost 80% of automobile consumers come from the middle and lower class household?
“With such ineffective public transportation system in Sabah, most blue collars are forced to buy cars to work.
“So what does he mean when he says the increment of petrol price will not affect the normal citizens like us as these car owners are usually rich?” asked Wong.
He said any spike in petrol and diesel in Sabah will directly increase the transportation costs.
“In Sabah logistical costs is already relatively high due to lack of good basic infrastructures.
“As a result, it will cause higher prices of commodity goods and burden will eventually be passed down to end consumers, be it normal citizens or rural villagers.
“Everyone in general will suffer in one way or another especially in Sabah,” Wong said.
~ Free Malaysia Today

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