Electricity Supply Industry Reform in Malaysia: Current State and Way Forward

Abstract

The Malaysia electricity supply industry (MESI) has gone through a series of reforms and restructuring since it first started at the beginning of the last century. The latest series of reform, known as MESI 1.0 has been ongoing since 2010. The objectives are to achieve secure and reliable supply of energy, to have economically competitive tariffs, to be environmentally sustainable and to improve customer satisfaction/choice. MESI 1.0 is now coming to its end, and in a recent development, the government has announced the commencement of the next series of MESI reform, MESI 2.0. The objectives of MESI 2.0 are to increase the industry efficiency, to future proof the industry, structure, regulations and key processes, and to empower the consumers. MESI 2.0 is obviously the continuation of MESI 1.0. Thus, prior to the start of MESI 2.0, it is important to review the progress and achievements of MESI 1.0 in such a way that enables informed decisions to be made in designing MESI 2.0. This paper therefore presents a review on the progress and achievement of MESI 1.0, focusing on the initiatives undertaken and evaluating the extent to which the objectives of MESI 1.0 have been addressed by the initiatives. Analysis performed on the review results shows that the second objective of having competitive tariffs is mostly addressed by the initiatives whereas more work needs to be done to address the other objectives, particularly on being environmentally sustainable. Liberalization through the unbundling of MESI is also identified as the potential means to achieve the objectives of MESI 2.0. Findings from this study can serve as the reference point in identifying the current state of MESI reform and in determining the way forward for subsequent MESI reforms.