The government has increased the price of petrol by 6.6 percent and diesel by 18.5 percent from today after it said it was committed to cutting fuel subsidies to free up funds for development projects.

The price of a liter of petrol would rise by 10 sen to RM1.62 while diesel would go up by 20 sen to RM1.281, Prime Minister Abdullah Ahmad Badawi's office said in a statement to the official Bernama news agency.

The increase was part of government efforts to cut the soaring cost of its subsidies amid record high global crude oil prices, it said.

Fifth fuel hike

This is fifth time the government has raised petrol prices since May last year.

The last price hike was three months ago when the cost of petrol went up by 7 percent while diesel was up by 23 percent.

The price of diesel was also increased by 5 sen in March. Last year, the price of petrol was increased twice - 2 sen on May 1 and 5 sen on Oct 1 .

The price of diesel - the fuel used by major transportation companies - has increased by a whopping 68.3 percent since May, 2004, while petrol is up by 20 percent.

However, the government said that prices still remain low compared with the rest of the region.

Only the oil-rich kingdom of Brunei retains its fuel at prices lower than Malaysia's.

Subsidies for petroleum cost Malaysia RM4.8 billion last year. Despite Sunday's price increase, subsidies are expected to reach RM6.63 billion this year due to rising oil prices, it said.

The government has said that fuel subsidies will eventually be scrapped to ensure they did not take away much needed funds for the development of schools and rural infrastructure.