Diesel subsidy: 'VOP for contractors to be settled in a month'

The Variation of Price (VOP) provision, to assist contractors faced with rising costs due to the diesel subsidy rationalisation, will be settled in a month, said Works Deputy Minister Ahmad Maslan.

He said his ministry has met with Finance Minister II Amir Hamzah Azizan, the secretary of the Treasury Department, and the director of the National Budget Office to discuss implementing the VOP.

“During the meeting, the Construction Industry Development Board (CIDB) team and the Works Ministry requested that considerations on VOP be given to contracts implemented before the announcement of the targeted diesel subsidy.

“The Finance Ministry has also agreed and will hold a discussion soon involving the percentage of VOP that will be given to contracts involved in projects before the targeted diesel subsidy,” he said.

Ahmad (above) was speaking to reporters after officiating the 47th annual general meeting meeting of the Malay Contractors Association of Malaysia’s Kelantan chapter in Kota Bharu today.

“The diesel subsidy provided by the government to the people previously was about RM14 billion. Now we are only retracting RM4 billion in subsidies that are supposed to be given to the public… we still give RM10 billion.

“Therefore, we will work on implementing this VOP. If subsidies are given to heavy machinery linked to the construction sector, (government) savings won’t reach RM4 billion,” he said.

Ahmad also pointed out that not all construction materials were impacted by the recent diesel subsidy rationalisation.

He said this is because some materials could be brought in using vehicles that qualified for the fleet card, making them qualified to receive government subsidies in the form of lump sum payments.

“There are some construction materials that can be brought in by vehicles using the fleet card, not all construction materials are impacted by the recent subsidy (rationalisation),” he said.

The government agreed in principle last Saturday to implement the VOP to assist contractors faced with rising costs of construction materials to ensure projects can be completed on time.

- Bernama

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