MP SPEAKS The government must explain how new fuel prices are calculated.

In today’s Chinapress Daily‘s exclusive headlined news, it was reported that it had come to know that effective tomorrow , the new fuel prices will be:

RON95 - RM2.26 per litre (a reduction of 4 sen per litre)

RON97 - RM2.46 per litre reduction of 9 sen per litre)

Diesel - RM2.23 per litre (increase of 3 sen per litre).

If the report is true, deputy Finance Minister Ahmad Maslan must explain how the new prices are calculated as I believe Malaysians will not only be surprised by the low price reduction for RON 95, they will be shocked that the diesel price will go up instead.

According to press report, with OPEC’s decision yesterday not to cut oil output, benchmark Brent oil price broke below USD70 a barrel. 

This means that since June, there has been a drop of about 40 percent of its value, falling from above USD115.

Why is it that with such a big drop in crude oil price, Malaysians will still have to pay higher price for diesel?

The government must therefore explain how the managed float system works and also show how the new fuel prices have been calculated.

If the calculation under the system is such that there can  only be a 4 sen reduction for RON 95 and an increase of 3 sen for diesel price, this means that the government should not have completely removed the fuel subsidy. 

On Nov 22, it was reported that Ahmad ( righ t) had said that the removal of direct fuel subsidies will be beneficial to Putrajaya as the annual average subsidy of 74 sen per litre for RON95 and 76 sen for diesel, has contributed to the government racking up a RM19 billion bill for fuel subsidies.

RM19 billion is huge amount. So why must the government be in such a hurry to completely remove direct fuel subsidies?

Going by Ahmad’s statistics, even if the government continues to provide a subsidy of 30 sen per litre for RON 95 and diesel, the government can still save a huge amount.

So why does it want to burden the people with complete subsidy removal?

Ahmad Mazlan also said that the government may introduce some form of fuel subsidy if global oil price rises above US$80 a barrel, but it will not be a return of blanket subsidies for RON95 and diesel as is currently employed.

In order not to burden the people, any subsidy removal must be done in stages and sufficient subsidy must be reintroduced when crude oil price goes upwards.

TERESA KOK is MP for Seputeh and DAP National vice-chairperson.