The diesel crises last week was 'created' to justify the petrol and diesel hike, alleged an opposition leader during a protest against the hike at the Selangor Chinese Assembly Hall in Kuala Lumpur today.

Some 20 people, carrying a banner ' Kenaikan harga petrol menyebakan inflasi berlarutan ' (Hike in petrol prices lead to prolonged inflation), partook in the 30-minute long demonstration, which started at 2pm.

"The government blaming smugglers and threatening to invoke the Internal Security Act (ISA) against the smugglers seems intentionally done to worsen the situation," said Parti Keadilan Rakyat (PKR) information chief Tian Chua when met at the scene.

He accused the government of 'allowing' the smuggling activities which led to the diesel crisis so that the cabinet will approve the price hike.

In the past few months, the nation suffered an acute diesel shortage , which severely affected lorry and bus companies. The government pinned the blamed on smugglers who sold subsidised diesel for industry use.

Economic pitfalls

According to Tian Chua, the price hike revealed the government's ineffectiveness in handling the country's economy.

"The government not only failed to manage the economy properly but has also ignored the welfare of the people. The price hike will definitely burden the people," he said.

He warned that the hike will lead to an inflation and the cost of living will shoot up. "The already-fragile economy will collapse because of the inflation," he said.

The price of petrol and diesel was increased 10 and 20 sen per liter respectively (between 7 and 23 percent) today following a statement released by the Prime Minister's Department last night.

The government justified the increase by stating that if prices were not raised this year, it would have to bear a subsidy of RM8.96 billion while forgoing RM7.85 billion through tax exemptions. This would have resulted in the government incurring a loss of RM16.8 billion. Last year, the government had subsidised RM4.8 billion worth of petroleum products.

Last year, the price of petrol was increased twice - 2 sen on May 1 and 5 sen on Oct 1 .

Previously, petrol prices had increased by 1 sen in Nov 1, 2002 , while diesel increased by 2 sen.

Meanwhile, Tian Chua said PKR will be working with non-governmental organisations and opposition parties to organise a nationwide road show to explain to the people the actual reason for the price increase and its impact on daily life.

"Malaysians should rise to protest the mismanagement by the government," he added.