Prime Minister Abdullah Ahmad Badawi was on the defensive today over the government's decision to increase by 30 sen the price of petrol and diesel price which caught the public by surprise.

The premier, who is also the finance minister, was bombarded with numerous questions on the issue at a press conference this evening held at the Bank Negara in Kuala Lumpur.

He earlier attended a three-hour closed door briefing with the central bank's board of directors.

When asked by a journalist to comment on the petrol price hike announced last night, Abdullah instead shot back: " Apa pasal ? (What about?)"

The premier then argued that: "I don't think the hike is high because we have to compare it with other Asean countries except Brunei where it (petrol) is RM1.20 per litre.".

He then went on to list neighbouring countries' petrol prices to justify the latest hike which brings petrol to RM1.92 per litre which the PM was 'reasonable'.

"It's reasonable. Who has ever been happy when there is (a price hike)? But the rakyat must be able to understand that the government is not abolishing its (petrol) subsidy.

"If we abolish the subsidy, the petrol price will be RM2.50 per litre then ... cannot," he said in response to a question that many people were caught off-guard by the announcement.

Save on 'other costs'

Abdullah reiterated the government's assurance there would be no further rise in the price of petroleum products this year and the government would monitor prices of goods and services to check inflation.

He advised the people to save on other daily expenditures to cover the 30 sen hike in petrol price.

Switching tack, he then stressed the government was expected to save RM4.4 billion in fuel subsidies for this year as a result on the hike. The savings, he claimed, would be used for national development projects, particularly public transport.

When asked why the government did not increase petrol prices gradually, he replied: " Sedikit lagi sedikit lagi susah, naik sedikit barang naik, nak buat sekaligus ."

('Gradual increases are more difficult ... we increase a little and other prices will go up too, we wanted to do it in one-go'.)

The premier defended state oil company Petronas, which has been criticised by certain quarters for not sharing the burden of the government's fuel subsidy thus avoiding petrol price hikes.

Abdullah said Petronas did help the people with its revenue being used for development purpose.

The government today increased the price of petrol by a whopping 30 sen, from RM1.62 to RM1.92 per litre for top grade RON 97. The price hike, the first time in seven months, represents an increase of 18.5 percent - the country's biggest ever fuel price hike.

Meanwhile, the cost of diesel will also be 30 sen more tomorrow, a 23.4 percent increase from RM1.281 to RM1.581 per litre. The price of liquefied petroleum gas (LPG) has also been raised by 30 sen to RM1.75 per kg.

The last price hike was in July last year when the cost of petrol went up by seven percent with diesel costing 23 percent more. In less than two years, the cost of diesel has increased by an unprecedented 102.4 percent while petrol has gone up by 40.1 percent.

MAS given free hand

Meanwhile, Abdullah said he will give national carrier Malaysia Airlines (MAS) a free hand to implement its turnaround plan unveiled yesterday.

"I have no problem, I give them the go-ahead because this is MAS ... they are not running a government department," he said.

It was reported that MAS needed some RM4 billion to carry out the turnaround, and the carrier would ask the government to secure some of the funds while raising RM2 billion internally.

Present at the press conference were Bank Negara Governor Dr Zeti Akhtar Aziz and Second Finance Minister Nor Mohamed Yakop.