Petrol dealers in the dark over fuel subsidy payment mechanism

There are concerns over the system as to whether the new cards will be accepted at the current terminals of petrol stations


PETROL dealers are still uncertain of the petrol card mechanism for subsidised fuel using the card system for individuals outside the lower-income group.

The government has announced targeted fuel subsidy programmes. The first comprises recipients of the Cost of Living Aid (BSH) who will get the subsidy in the form of cash transfer, while those under the second category — the non- BSH recipients — will receive the subsidy through Kad95.

Kad95 users will enjoy a fuel subsidy of 30 sen per litre limited to 100 litres per month for cars, or 40 litres a month for motorcycles. The Kad95 will be implemented in stages during the first quarter of 2020.

Recipients of BSH will receive a petrol subsidy of RM30 a month for car owners or RM12 a month for motorcycle owners. Cash will be debited into the recipients’ bank accounts every four months.

Bumiputera Petrol Dealers Association of Malaysia president Datuk Abu Samah Bachik said petrol dealers are still in the dark over the payment process for Kad95.

He said there are concerns over the system as to whether the new cards will be accepted at the current terminals of petrol stations or if there will be a need to instal new card terminals specifically for Kad95.

“Petrol stations have not received information of the card payment except for what has been reported in the news.

“We are not sure of the new system and the government has yet to provide us with further details. If we need a new terminal, there are only two weeks left until the new year and we need to know the process.

“We are actually still waiting for the card details from the government because they have so many suggestions, but they have yet to be implemented,” he told The Malaysian Reserve recently.

Finance Minister Lim Guan Eng had said in October that the targeted fuel subsidy for those in the M40 (Middle 40%) income group will be prepared by March 2020. The group refers to those with a median household income of RM6,725.

Stakeholders have previously expressed their preference towards direct cash handouts for fuel subsidies instead of the petrol card mechanism as they wanted a mechanism that would ease the process for both supplier and consumer.

Another petrol dealer who declined to be named said petrol stations would not be affected by the subsidy given to BSH recipients as it would be given in the form of cash transfer and does not involve any changes to the system.

However, he noted that disruptions may emerge if payments are made using the proposed card mechanism.

“There needs to be a new machine if the government gives a subsidy card with a quota. Therefore, the transaction would not be as per normal and it may cause system delays at the petrol station. That is what we are worried about,” he said.

He added that the card which will enable M40 income group to enjoy the subsidy will lead to a huge transaction being made at petrol stations.

“Unlike the B40 (Bottom 40%) income group, M40 are those who often pump petrol as they use motor vehicles a lot more.

“The number of transactions from them will be big and we are concerned over the new system that might take place because it will have an impact on petrol stations such as a lagging payment process,” he added.

The government has also announced that the price of RON95 would be gradually floated when the fuel subsidy mechanism is in place.