Price cap on RON95 to be removed, says minister


THE government will not put a cap to the rise of RON95 petrol once the target fuel subsidy programme is implemented but any rise will be gradual to prevent shocks, said Domestic Trade and Consumer Affairs Minister Datuk Seri Saifuddin Nasution Ismail.

“The automatic price mechanism will still remain the method of calculation. Ceiling price at the moment, is not a consideration,” Saifuddin Nasution said in Dewan Rakyat yesterday.

“The government has decided on a gradual increase as the impact will be tough if there is a sudden price hike.”

Saifuddin Nasution said this in response to Rembau MP Khairy Jamaluddin’s query whether there would be a maximum price cap and if the mechanism will be based on full oil price or gradual.

The minister noted that the price of the RON95 fuel will gradually be adjusted to reduce its impact on consumers, following the government’s plan to float all fuel prices next year.

Following the introduction of the weekly fuel price float system at the start of this year, the government announced in February that the retail price of RON95 petrol would be capped at RM2.08 per litre even if the market price of crude pushed the pump price beyond that level.

However, with the targeted fuel subsidy scheme which will come into effect on Jan 1, 2020, the price for RON95 petrol will be allowed to float freely, with recipients of the Bantuan Sara Hidup (BSH) scheme to get the fuel subsidy.

According to Saifuddin Nasution, car owners on BSH will receive RM120 every four months while motorcycle owners will receive RM48 instead.

Additionally, the subsidies only apply to cars with an engine capacity of 1600cc, and below — unless they are over 10 years old. Similarly, the motorcycle subsidy only applies to engine capacities below 150cc unless the vehicle is over seven years old.

He also clarified that this subsidy only applies to one vehicle per individual. He said studies found that some individuals in the bottom 40% income group owned up to six cars.

One exception to the petrol subsidy scheme are those living in East Malaysia — Sabah, Sarawak and Labuan.

However, these states will see the price of RON95 petrol floating with a ceiling price capped at RM2.08.

“The private transport used by the general public is by car and motorcycle, but the ministry has found that the situation in Sabah and Sarawak is different than in Peninsular Malaysia.

“There are residents along the major rivers that use small boats as their main mode of transportation. These small boats use an engine that uses gasoline as fuel. In addition, there is also the use of petrol gensets in homes located in the interior of Sabah and Sarawak,” he said.

At present, Saifuddin Nasution said, there is no primary source of data that can be used to identify the owners of small boats and gensets to deliver the fuel subsidies directly.

“If data such as vehicle ownership is available through the Road Transport Department, certainly the ministry would implement the petrol subsidy programme for residents in Sabah, Sarawak and the Federal Territory of Labuan.

“This is the approach used by the ministry in the formulation of data-based policies. Each decision made is based on a strong source of information,” he added.