Electricity prices in Malaysia could remain under pressure over the next five years as domestic gas supplies decline and the country gradually moves away from coal-fired power generation, former economy minister Rafizi Ramli has warned.
Speaking on his Yang Berhenti Menteri podcast, Rafizi said the issue should not be viewed simply as a problem involving Tenaga Nasional Bhd (TNB) or higher monthly electricity bills, but as a wider national energy-security challenge.
“This is not just a TNB problem. This is a national problem,” he said.
Rafizi said Malaysia’s power-generation system was built decades ago when the country had abundant domestic gas. However, gas supply in Peninsular Malaysia has increasingly fallen short of demand, forcing the country to rely more heavily on liquefied natural gas (LNG) imports.
He said the pressure was already reflected in gas prices, with Tier 2 gas rising from a reference level of around RM46 per million British thermal units (MMBtu) to between RM70 and RM80 per MMBtu following disruptions around the Strait of Hormuz.
According to Rafizi, the sharp increase indicated that domestic gas supply was insufficient to meet electricity-sector demand, even at around 800 million standard cubic feet per day.
“Malaysia has to import gas. That means the gas balance is already a problem,” he said.
Rafizi also cautioned that recent measures to shield households from higher electricity costs should not be viewed as a permanent solution. Prime Minister Anwar Ibrahim recently announced that electricity bill protection for domestic users would be expanded from 600kWh to 800kWh a month from September until Dec 31.
Under the measure, households consuming up to 800kWh monthly will be exempted from the Automatic Fuel Adjustment (AFA), retail charges and sales and service tax.
However, Rafizi said the underlying pressure would remain as domestic natural gas production declines and Malaysia becomes increasingly dependent on imported fuel.
Malaysia’s electricity supply relies mainly on coal, gas and renewable energy. Recent figures cited by Rafizi put coal at about 57.9% of electricity generation, followed by gas at 34.9%, while hydro and solar accounted for 4.7% and 2.5% respectively.
Rafizi said Malaysia could not continue relying on coal indefinitely, particularly as the country has committed to achieving net-zero emissions by 2050.
He also warned that continued dependence on high-carbon electricity generation could expose Malaysian exporters to carbon taxes in markets such as Europe, Japan and South Korea, potentially affecting their competitiveness.
At the same time, Rafizi said solar power could not immediately replace coal on the scale required because of challenges involving land availability, battery storage, financing and the pace of rooftop solar adoption.
“We cannot turn the whole country into a solar field. We still need land for padi, palm oil and other uses,” he said.
The government is also studying the potential role of nuclear energy in Malaysia’s future energy mix. Deputy Prime Minister Fadillah Yusof said in March that MyPOWER Corporation Malaysia was conducting a comprehensive assessment of a potential nuclear energy programme, including policy, legal and regulatory frameworks, project feasibility, industry participation and human capital development.
Rafizi said natural gas was supposed to serve as a transition fuel while Malaysia expands renewable energy and gradually phases out coal.
But he argued that this transition would be difficult if domestic gas supplies continued to decline, leaving Malaysia increasingly reliant on LNG imports.
He added that imported LNG would also create greater cash outflows because purchases are settled in US dollars, potentially putting pressure on the ringgit if Malaysia needs to spend billions of ringgit annually to secure gas supplies.
Rafizi also pointed to Europe’s experience with Russian gas as an example of the risks associated with heavy dependence on external energy sources.
“We have seen what happened to European countries when they depended too much on cheap gas from Russia,” he said.
Ultimately, Rafizi said higher fuel costs would eventually affect consumers because the government could not subsidise electricity indefinitely.
He said the AFA mechanism should therefore be viewed in the wider context of electricity prices becoming increasingly exposed to movements in fuel costs and foreign exchange rates.
Rafizi said the combination of declining domestic gas supplies, rising import costs and the transition away from coal meant electricity tariffs would remain under pressure unless Malaysia accelerated renewable energy deployment and addressed its long-term gas supply balance.
Malaysia’s broader energy transition is already focused on increasing renewable capacity, with Rafizi previously describing the National Energy Transition Roadmap as a framework for reducing dependence on coal and gas over the longer term.
