UPDATE 1-Malaysia cuts gas prices for heavy industrial users

Tag : food raw materials

KUALA LUMPUR, July 11 (Reuters) - Malaysia has cut natural gasprices for heavy industrial users by 26.7 percent after consideringfeedback from various parties, Economic planning minister AmirshamA. Aziz said on Friday.
'The uncertain global economic conditions and surging prices of rawmaterials have made it difficult for the private sector to plantheir costs,' he told reporters.
The natural gas price will fall to 23.88 ringgit ($7.35) permillion btu (British thermal unit) from 32.56 ringgit previously.
The new price, effective July 1, marks a 70 percent discount to themarket rate, now at 79.00 ringgit per mmbtu, he said.
Heavy industrial users are those who use more than 2 million squarecubic feet of gas per day. The other category is manufacturers whouse less than 2 million cfd.
Economists said the move would have little impact on risinginflation, which the central bank has said could top 6 percent inJune, the highest in 26 years.
'It would see some easing of the effects of inflation but overallinflation is on the upside,' said Joanna Tan, economist withForecast Pte Ltd.
'Right now, external fuel prices and food prices have pushed upinflation. Malaysia appears to be using fiscal schemes to temperinflation effects.' 'With the reduction, costs of making exports islowered. It might make exports a little more competitive but thenagain slower external demand has been weighing on exports,' shesaid.
Last month, the government raised fuel prices to rein in itsballooning subsidy bill.
That would drive up inflation for the rest of the year before pricepressures moderate in the second half of 2009, central bank chiefZeti Akhtar Aziz said earlier in the week.
($1=3.249 Malaysian Ringgit)
(Reporting by Soo Ai Peng; Writing by Niluksi Koswanage; Editing byJacqueline Wong)

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