Tuesday 21 October 2014

Chong: Why wait for royalties when SESCo can afford to reduce electricity tariffs?

KUCHING, Oct 21, 2014: Sarawak DAP chairman Chong Chieng Jen stressed today there is no need for the State government to wait for the increase in the oil and gas royalties from Petronas before it can reduce electricity tariffs.

"SESCo (Syarikat Sesco Berhad) can afford the reduction of electricity tariffs," he said in a statement when commenting on a pledge by Chief Minister Adenan Satem that the State government would reduce water and electricity tariffs if it succeeded in getting Petronas to raise the oil and gas royalties for Sarawak.


The State government is negotiating with the national oil corporation to raise the royalties from the present 5% to 20%. In May this year, the State Assembly adopted a resolution calling on Petronas to up the royalties.

Adenan, speaking  at a gathering  organised by the Federation of Orang Ulu Association Malaysia (Forum) in Miri Saturday night,  said he wanted to increase the State’s revenue, and that was why he wanted the oil and gas royalties to be increased.

“Where do the gas and oil come from, if not from Sarawak?" he asked.

“I am negotiating with Petronas, and (the royalty hikes) could be in the form of royalty, contract, manpower, expertise or corporate social responsibility.

“If we make more money from Petronas through the oil and gas industry, I can reduce your electricity and water bills,” the chief minister pledged.

Chong, responding to Adenan's pledge, said:"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 royalties because of the simple fact that SESCo can afford it.

"Our call for the reduction in electricity tariffs is based solely on the ability and profitability study of SESCo to reduce the tariff.

"In the financial year ended Dec  31, 2013, SESCo generated a revenue of RM2,312 million and made a pre-tax profit of RM408.5 million," Chong, who is also Bandar Kuching MP, pointed out.

He said that at present the normal electricity consumers are paying the tariffs on an average of RM0.30 per KwH and that they include those who are paying domestic, commercial or industrial tariffs.

He added that the special consumers, like the smelting plants in Samalaju, Bintulu,  are paying tariff rates that are separately negotiated and agreed under separate agreements. 

"Their tariff rates, which were kept as secrets by SESCo, are lower than those paid by the normal consumers," he said.

Chong said that in the financial year 2013, about 30% of the revenue of SESCo came from these special consumers while for the financial year 2014, at least 40% of the SESCo’s revenue will come from these special consumers under special contracts for the supply of electricity. 

He added:"It is the projection of the Sarawak government, as stated by Minister of Public Utilities  Awang Tengah Ali Hasan in the recent State Assembly sitting, that the committed electricity demands would increase by at least 25% from year 2013 to 2014. 

"Out of this increase, 90% will be for the sale of electricity pursuant to the special contracts with the industries in SCORE (Sarawak Corridor of Renewable Energy) areas," he said.

He added that the Sarawak DAP’s campaign calling for reduction of electricity tariffs is only in respect of the tariffs paid by the normal customers of SESCO, including domestic, commercial and industrial consumers. 

He said that the proposed reduction would only involve the revenue from SESCo’s normal consumers, without affecting the contractual rates under the special contracts with the special consumers.

"Based on  some simple mathematics calculation, it is obvious that a 30% reduction of the electricity tariffs for the normal  consumers will 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 royalties to lower the electricity tariffs in the State," he asserted.


Chong urged the State Government not to find excuses to delay the lowering of the electricity tariffs in Sarawak, saying:'' In light of the escalating costs of living, the State Government should lower the tariffs to help ease the financial burden of the people, especially when it can afford."

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