The Liberalisation of the Gas and Electricity Market in Peninsular Malaysia: New Market Structures and the Roles of Market Players

Malaysia is currently aiming to create a competitive gas and electricity market through restructuring, privatisation and creating a platform for the entry of new market players. The establishment of the independent regulatory institution and amendment of the gas and electricity legislations are some of the initiatives taken to facilitate the gas and electricity market reform. For example, the amended gas supply legislation in 2016, aims to liberalise the gas market and to enable effective implementation of the Third Party Access (TPA) system that will allow more players, apart from Petronas at present, to import and supply Liquefied Natural Gas (LNG) using existing facilities.

The gas industry reform and the evolution of a competitive gas market in Malaysia are closely related to the design of a competitive electricity market in the country. Gas is one of the major fuels consumed in the power sector, and gas industry reform would impact gas consumption and gas pricing in the power sector. The government also aims to restructure the electricity supply industry structures that work efficiently while allowing for the penetration of renewable energy. The focus of this research is to design a new gas and electricity market structure in Peninsular Malaysia, which is especially timely and relevant. It is envisaged that the research findings will make two key contributions. First, they will contribute to gas industry reform that should result in customers purchasing gas from different producers, producers competing for customers and short term gas trading as well as gas-on-gas competition. And second, they will contribute to electricity market reform that creates competitive power markets through the restructuring of the existing single buyer model in Peninsular Malaysia.

By: Maggie Kumar