Fuel price hike: Subsidy still in force
By : Deborah Loh
The New Straits Times
June 5, 2008
Datuk Seri Abdullah Ahmad Badawi and Datuk Seri Mohd Najib Razak at the press conference to announce the increase in petrol and diesel prices.
PUTRAJAYA: The pump price for petrol is now RM2.70 per litre and diesel RM2.58 a litre following a cut in the fuel subsidy.
The increase of 78 sen per litre for petrol and RM1 a litre for diesel still leaves their prices 30 sen below the market rate.
Announcing the hike, Prime Minister Datuk Seri Abdullah Ahmad Badawi said a 30-sen subsidy per litre will prevail on pump prices, and will be used as an “automatic adjuster??? in tandem with fluctuations in the world oil price.
The government will make the adjustments monthly.
To cushion the price increase, cash rebates will be given to owners of cars and motorcycles, based on engine capacity, through post offices from July 1.
These rebates will be given to owners of vehicles with road tax renewed between April 1 this year and March 31 next year.
Those who have already paid their road tax should produce their vehicle registration details at a post office and Pos Malaysia will issue them a money order.
Vehicles with large engine capacities will be levied a lower road tax from June 1.
The rebates will cost the government about RM5 million this year.
From today, the price of subsidised diesel will be standardised at RM1.43 per litre for fishermen, boat owners and transport operators.
Previously, subsidised diesel was priced at RM1 per litre for fishermen, RM1.20 for boat owners and RM1.43 for transport operators.
Prices for cooking gas (liquefied petroleum gas or LPG) and natural gas for vehicles (NGV) remain unchanged at RM1.75 for every kg of LPG and 63.5 sen for every litre of NGV.
This involves Petronas restructuring its gas subsidy from July 1 for the peninsula whereby it will raise gas prices for energy producers and industrial users.
The government will save RM13.7 billion from the restructured package.
Out of this amount, RM7.5 billion will go towards subsidising prices of petrol, diesel and gas.
The rest will be spent on food security (RM4 billion), cooking oil subsidies (RM1.5 billion), standardising the price of rice in Sabah and Sarawak (RM0.4 billion), flour subsidies (RM0.2 billion) and bread subsidies (RM0.1 billion).
Abdullah said even after the fuel price increase and restructuring, the government would still have to spend about RM18 billion to pay for the difference between the pump prices and the world price.
Reiterating his call for Malaysians to change their lifestyle and be more prudent, Abdullah said they should try to spend less in all areas.
“This is something that is happening all over the world. We are not lifting the subsidies totally as we are still subsidising petrol and other items like cooking oil.???
He said efforts were being made to improve the public transport system.
Acknowledging that the fuel price increase would not go down well with the public, Abdullah said the government could no longer sustain the rising price of oil.
“I am not out to be popular. We try our best, and this is something we are very serious about, but naturally people will not be happy.???