Since diesel subsidy was introduced in 2001, the supply pattern of diesel between subsidised and non-subsidised users underwent a dramatic reversal which tells clearly where the diesel has gone.

The subsidised group's consumption shot up 100 percent from 2.5 billion litres in 2001 to 5.5bil lit in 2004. This, however, does not entirely correspond with a slump in non-subsidised group's consumption which went down by almost 100 percent from eight billion litres in 2001 to 4.3bil lit in 2004.

The drop in the non-subsidised group's consumption (3.7bil lit) is not entirely made up by the increased consumption of the subsidised group (3.0bil lit). A closer reading of the supplies figures tells a few more things which cannot entirely be explained by diesel smuggling alone.

Another way to look at this more accurately is to look at the combined subsidised and non- subsidised diesel consumption over the years.

2001: (2.5 + 8.0) bil lit = 10.5bil lit;

2002: (2.9 + 6.8) bil lit = 9.7bil lit;

2003: (4.1 + 6.2) bil lit = 10.3bil lit;

2004: (5.5 + 4.3) bil lit = 9.8bil lit;

Between 2001 and 2004 there was a decline of 0.7bil lit of diesel consumption or -7.1 percent of the total diesel consumption for 2004. If fuel usage is taken to reflect economic growth (which it does in this fuel-dependent age), the picture is one of stagnation or slight decline over the four years.

In a growing economy (said to grow by five percent per annum), fuel consumption should also increase in tandem, but this is clearly not collaborated by an increase in diesel consumption.

Of course, it is possible that diesel usage had been economised through fuel consumption efficiencies, but it is doubtful if Malaysian industries are very into fuel efficiencies.

Now, where does the government want to place the diesel allegedly smuggled out of the country? One cannot dismiss the extent of illicit cross-border trade in diesel but shouldn't any amount only add to an increase in the demand - and thus consumption - for diesel?

Another issue here - since a large quantity of diesel has been diverted from subsidised outlets to non-subsidised users, how has this gone unnoticed by the government?

These unintended diesel subsidies which run into RM8.12 billion (over half or 58 percent of the total diesel subsidies of RM14bil in 2004) cannot be blamed on the non-industrial or subsidised users .

If we were to need someone to blame, it is the government's unresponsiveness and inefficiency. And since the diversion of subsidised diesel cannot be achieved without official collaboration, blame it on massive corruption as well.

Thus, the most effective means to cut fuel subsidies by the billions is to cut off the unintended beneficiaries - not by raising the price of diesel across the board as proposed by some. In addition, it is a folly to expect service stations to distribute subsidised diesel.

They are a commercial operation which put profit above anything else. What is there to stop them from selling their diesel to the highest bidder and then tell the subsidised users that their diesel has run out?

The current problem involving diesel arose from the bad administration of its subsidies. The whole delivery system needs a reworking or else the argument to cut the diesel subsidy will become attractive more for administrative reasons than for its original social objectives. It will be a sad day if this happens in an oil producing country.

The government should seriously consider cracking down hard on corruption besides using road- tax cuts, subsidy coupons and other alternative systems for delivering fuel subsidies. If the government cannot bring itself to crack down on diesel subsidy corruption where RM8.12 billions is to be saved, it shows how bankrupted this government is.

Indeed, the cumulative lost through diesel subsidy from 2001-2004 alone is a multi-billion ringgit scandal which the Barisan Nasional government must account for and the relevant minister investigated for gross negligence.