Govt needs time to review all the proposals for new subsidy scheme, which will cost RM2b every year

By SHAHEERA AZNAM SHAH / Pic By HUSSEIN SHAHARUDDIN

The government has received more than 50 proposals to develop a nation-wide petrol subsidy distribution checking and monitoring system, a project which will allow only eligible Malaysians to buy fuel at discounted price at petrol stations.

The fuel subsidy programme for targeted recipients, which was announced during the tabling of the 2019 budget, is expected to be rolled out by the second quarter of next year.

But the system to be selected for the scheme must be secure and abuse-proof as the subsidy will involve millions of Malaysians who use over 1.2 billion litres of fuel monthly.

A source close to the development said the Ministry of Finance (MoF) has received over 50 proposals to develop the fuel subsidy distribution system before the tender deadline, which ended on Dec 10.

“The tender closed on Dec 10. The government now will need time to review all the proposals,” said the source to The Malaysian Reserve (TMR).

The MoF issued the request for proposal for the fuel subsidy system on Nov 19, 2018.

The source said the government will go through all of the proposals and shortlist the candidates.

The proposals have been submitted by individual companies, consortium and joint-venture partners. 

The scheme is expected to be massive as it would be the first petrol card programme introduced by the country. Putrajaya spends billions on subsidy for RON95 fuel, which presently benefits both the rich and the poor.

Under the new scheme, which will cost the government about RM2 billion every year in subsidy expenditure, eligible Malaysians will enjoy a 30 sen subsidy for every litre of petrol up to 100 litres monthly for cars with an engine capacity of 1,500cc and below. Motorcycle users are allocated the same subsidy rate, but up to a maximum of 40 litres a month.

There are about four million car and 2.6 million motorcycle owners who will benefit from the targeted fuel subsidy programme.

In November, Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail said under the proposal, interested companies are required to design, develop and operate the application for the scheme.

Petrol Dealers Association of Malaysia president Datuk Khairul Annuar Abdul Aziz said the mechanism must be able to calculate precisely to avoid additional stress to petrol dealers.

“If the new mechanism involves a card system issued by banks, we do not want to bear the merchant charges, which at the moment are borne by us at 0.8% to 1% rate for every transaction.

“The bottom 40% income group (B40) normally uses cash in their petrol purchase and if the government decides to impose the card system on them, it will incur more cost to us,” he told TMR.

Khairul Annuar estimated that a card system issued by banks could add an average of RM3,000 in monthly charges to each petrol dealer.

“Right now, they are spending around RM2,000 to RM10,000 on the banks’ merchant charges.

“We have calculated based on the litre and the price of how much they are buying. The use of the card will add around RM3,000 per petrol station or a total of RM10 million a month for the 2,500 petrol station operators in Malaysia,” he said.

The government has received feedback from various parties, including Bank Negara Malaysia, associations, consumers and petrol stations operators over the petrol card subsidy programme.

It is estimated that Malaysian motorists use about 1.2 billion litres of petrol every month, of which 90% is RON95.