The New Sabah Times reported that housing developers in Sabah may be able to pay less electricity capital contribution pending the outcome of a meeting with Sabah Electricity Sdn Bhd (SESB) this month.
I hope the outcome will be positive as the developers' construction costs will be lesser and this will benefit house buyers. In other words, new homes will be cheaper by RM2,500 to RM4,500. I guess this will bring down the value of homes in the secondary market too. So let us all keep our fingers crossed !
So what is Electricity Capital Contribution ?
It is the cost for the laying of electricity infrastructures to supply power to the housing development areas.
Why is SESB's capital contribution high (for Sabah)?
The capital contribution is based on the estimated cost of getting the electricity supply to the premise, which include the cost of material, labour, transportation, and any work that has to be contracted out. Based on this estimated cost, the expected returns of the investment for a three year period is calculated. Unfortunately, due to the present tariff structure and the high cost to generate electricity, there is no nett returns for SESB and the customer therefore is required to pay the full amount. SESB does not make profit on this capital contribution. (Source : SESB)
For the record, currently developers in Sabah are required to pay a lump sum of between RM3,000 to RM5,000 for a single or double-storey terrace house in terms of electricity capital contribution.
The amount is far higher than in the peninsula where the rate has been fixed at only RM450 per unit.
The scenario in neighbouring state, Sarawak is even worse, over there the developers have to fork out between RM8,000 to RM15,000 per terrace house for the electricity capital contribution.
In conclusion, I hope that whatever savings derive from the lesser contribution rate will benefit house buyers and not enrich the developers.
Read the New Sabah Times report here...I hope the outcome will be positive as the developers' construction costs will be lesser and this will benefit house buyers. In other words, new homes will be cheaper by RM2,500 to RM4,500. I guess this will bring down the value of homes in the secondary market too. So let us all keep our fingers crossed !
So what is Electricity Capital Contribution ?
It is the cost for the laying of electricity infrastructures to supply power to the housing development areas.
Why is SESB's capital contribution high (for Sabah)?
The capital contribution is based on the estimated cost of getting the electricity supply to the premise, which include the cost of material, labour, transportation, and any work that has to be contracted out. Based on this estimated cost, the expected returns of the investment for a three year period is calculated. Unfortunately, due to the present tariff structure and the high cost to generate electricity, there is no nett returns for SESB and the customer therefore is required to pay the full amount. SESB does not make profit on this capital contribution. (Source : SESB)
For the record, currently developers in Sabah are required to pay a lump sum of between RM3,000 to RM5,000 for a single or double-storey terrace house in terms of electricity capital contribution.
The amount is far higher than in the peninsula where the rate has been fixed at only RM450 per unit.
The scenario in neighbouring state, Sarawak is even worse, over there the developers have to fork out between RM8,000 to RM15,000 per terrace house for the electricity capital contribution.
In conclusion, I hope that whatever savings derive from the lesser contribution rate will benefit house buyers and not enrich the developers.
Less electricity capital contribution a possibility
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Source : New Sabah Times, 02102009
Image source : SESB
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