Ku Nan: RON95 Only For Those Who Need It
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- Published on Friday, 24 January 2014 09:09
A temporary 'sorry, out of diesel' notice placed on the nozzle of a pump at a petrol station in Jalan Duta, Kuala Lumpur. Tengku Adnan said the subsidy cut was still being studied. — Picture by Shahir Omar. /NSTKUALA LUMPUR: Putrajaya may restrict sale of subsidised RON95 petrol only to Malaysians who need it and could begin doing so as early as May, Datuk Seri Tengku Adnan Tengku Mansor suggested yesterday.
The federal territories minister said this was necessary in order to reduce government spending on subsidies, according to a report by The Star on its website.“We want to impose the increase to only those who can afford it.
Someone may drive a (Toyota) Alphard or even a Mercedes (Benz) but they still use RON95 petrol.
“Although this subject was proposed several times in the past but we will be implementing it now after we find a correct method of applying it,” the minister was quoted as saying at Menara DBKL here yesterday by the newspaper.
Tengku Adnan said the matter was still being studied by Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar, but did not disclose details on how the system will be implemented.If implemented, the move will essentially eliminate petrol subsidies for the sections of the public who will be restricted to buying the more expensive RON97 petrol.
Unlike the fuel price of RON95, which is set by the federal government, the price of RON97 changes according to a “managed float” based on market prices.
The price of RON97 was increased to RM2.80/L this month, while RON95 retails for RM2.10/L following the last fuel price increase in September.For Malaysians driving the typical small family saloons with a full tank of approximately 40L, being restricted to RON97 means they must pay an extra RM28 for each refill.
It is unclear if the move will affect diesel now being sold for RM2.00/L.Sale of both types of subsidised fuel is already restricted to foreigners, although rampant smuggling still occurs at the country’s borders.
On Monday, Prime Minister Datuk Seri Najib Razak reiterated that Putrajaya was spending almost as much on subsidies as it was to develop the nation, and said fuel subsidies have now risen to RM24.8 billion compared to between RM3 billion and RM 4 billion when the scheme was introduced.
But the timeline to introduce the new tiered pricing scheme as revealed by Tengku Adnan comes at a time when Malaysians are already straining under rising prices that are largely blamed on the government.
It also risks exacerbating the accelerating inflation for transport costs, which rose to 5 per cent in December according to figures released by Bank Negara Malaysia on Wednesday.Overall inflation also increased more than expected, rising to 3.2 per cent for the year.
Since September last year, Putrajaya has embarked on aggressive cost-cutting measures after pressure grew for it to rein in a chronic budget deficit that traces back to the Asian Financial Crisis of 1997, and which has left Malaysia’s national debt at just below a critical legal ceiling.
Among others, the government has reduced fuel subsidies, removed the price control for sugar and increased the excise tax for tobacco.Electricity tariffs and the assessment value for Kuala Lumpur properties have also increased, while the federal government is considering raising toll rates and public transport fares this year.
