Subsidy leads to gas issue


Yes, it does.

Dateline 2012-05-04:

Subsidised gas and the inflated demand it encouraged are some of the factors that led to the severe gas shortage faced by Tenaga Nasional Bhd (TNB), said International Gas Union (IGU) president Datuk Abdul Rahim Hashim.

“We started the subsidies after the Asian financial crisis, and we should not have continued doing that. We should have weaned ourselves off it and gone back to market prices after the economy picked up again.

“We have a system whereby one end is fixed (electricity tariffs), and generators are looking for the cheapest source of fuel. Gas is the cheapest of the lot, and since generators tend to use the cheapest resource available, that has pushed the system to the limit,” he told StarBiz in an interview.

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