High domestic gas prices in Malaysia

 

High domestic gas prices in Malaysia are driven by factors like the government's gradual removal of subsidies and the impact of international gas prices, particularly the Malaysia Reference Price (MRP), on the regulated gas price. The MRP, based on LNG export prices, can fluctuate, leading to adjustments in domestic gas tariffs. Additionally, Gas Malaysia's selling price for natural gas is also influenced by these factors and can be revised periodically. 

Here's a more detailed breakdown: 

 

Subsidies and Deregulation: 

Malaysia has been gradually reducing gas subsidies, leading to price increases for various sectors. This is part of a long-term plan to achieve market parity in gas pricing. 

 

Malaysia Reference Price (MRP):

The MRP, used to determine the regulated gas price, is based on the weighted average price of LNG exported from Malaysia. Fluctuations in international LNG prices directly affect the MRP and, consequently, the domestic gas price. 

 

Gas Malaysia's Role:

Gas Malaysia is a major player in the natural gas retail market and its selling price is directly impacted by the MRP and other factors like transportation and distribution costs. 

 

Impact on Consumers:

The price revisions can affect different consumer categories differently, with some seeing higher tariffs than others. For example, residential consumers may have their tariffs kept unchanged while other categories face increases. 

 

Recent Price Adjustments:

Gas Malaysia has announced price revisions in the past, citing the need to align with the national rationalization plan and the gas cost pass-through mechanism. These adjustments have resulted in both base tariff increases and pass-through surcharges. 

 

Industry Impact:

High gas prices can negatively impact local manufacturers, who may face increased production costs. 

 

Looking Ahead:

Industry analysts expect the government to adjust the regulated gas price, potentially downward, if international prices decrease. However, gas prices are expected to remain relatively stable or even drop slightly in the coming year, but this is dependent on various factors.

 

Link :

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