End to the fuel subsidies Dec
Published on: Saturday, November 22, 2014
PUTRAJAYA: All subsidies for RON95 petrol and diesel will be stopped beginning Dec 1, said Datuk Hasan Malek. The Domestic Trade, Cooperatives and Consumerism Minister, who announced this at a press conference, on Friday, said the retail prices for RON95 petrol and diesel will be fixed according to a managed float, similar to the mechanism dictating the RON97 petrol price.Hasan said there would be an announcement at the end of each month to set the following month's fuel prices. ADVERTISEMENT He said it would be determined based on a monthly average price."We monitor the world petroleum prices everyday to get the average prices."As for Dec 1 prices, we will calculate the average from Nov 20 to Nov 30," he told a press conference here.Prices of RON95 petrol and diesel were last increased by 20 sen on Oct 2.ADVERTISEMENT On Oct 27, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah announced that the Government was mulling income-based fuel subsidies.On Wednesday, a 20 sen drop in the RON97 petrol price was announced, bringing it to RM2.55, just 25 sen more that the current subsidised RON95 petrol price of RM2.30.
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On the same day, Deputy Finance Minister Datuk Ahmad Maslan also said that the country could see a drop in the RON95 petrol price, as global crude oil prices continued to drop.The managed float system, which was decided by the Cabinet Friday, is the same system used to set the retail price of RON97 petrol since July 2010, he said.Through the managed float system, he said the average price difference in the products' cost will determine the price for the following month."This means, if the price of world crude oil increases, so will retail prices of RM95 and diesel and vice-versa," he said.The current price of RON95 is RM2.30 per litre and diesel is RM2.20 per litre.Hasan said the retail price for petroleum products in Malaysia was set through the Automatic Price Mechanism method since 1983.Through the APM, the Government sets the retail price at a certain level whereby the price change in the product will not affect the retail price.Hasan did not rule out the possibility of RON95 retail price being lower than it is currently if the world oil market prices kept showing a downward trend. "If this trend continues, it is expected the price of RON95 and diesel for the month of December will be reduced accordingly based on the APM formula," he said.Responding to a question, Hasan said the retail price for RON95 and diesel would be set according to the managed float method, on a monthly basis.He said the Government will monitor the development of the market price, product cost, world market price, and the currency exchange rate to set the retail price of petrol and diesel."We will monitor the world market on a daily basis but we will take the monthly average, and then, the Government will decide if the price needs to be increased or decreased."The price may fall or it may rise, but the trend in the past few months has been showing a stable decreasing trend," he said.Hasan said the Government had carried out studies on the implementation of the managed float system for RON95 petrol and diesel before deciding on going ahead with it.Stay up-to-date by following Daily Express’s Telegram channel.
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"This proves the Government's intentions of ensuring that the public fully benefits from the reduction of world crude oil prices," he said.Asked whether the implementation of this system was final, he said the Government was proactive and sensitive to the current situation based on the world market price and Organisation of the Petroleum Exporting Countries (OPEC) output. "Our approach is to put the people first. So whatever we can save is for the people's welfare," he said.