When will the government announce the expected hike in fuel prices, which will see the implementation of a new subsidy system?

Will it be in August as mentioned previously by the Second Finance Minister Nor Mohamed Yakcop as well as by Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad today?

Or will it be as soon as this Wednesday as announced also today by Prime Minister Abdullah Ahmad Badawi?

Whenever it may be, one thing is sure – everyone is confused by the conflicting statements from the three ministers.

Earlier today, Shahrir said that fuel prices will go up this August. His remarks echoed Nor Mohamed’s remarks last week of a price hike before the Budget, which will be unveiled on Aug 29.

However, Prime Minister Abdullah said today that the government will announce on Wednesday a new fuel subsidy.

According to Bernama, he also said that the decision on the fuel subsidy will take effect immediately to avoid any speculation.

"We need to look into it (fuel subsidy) again to make sure it will be the best that we can do for our people," Abdullah told reporters after chairing the National Small and Medium Enterprise Development Council in Kuala Lumpur.

When asked to comment on Shahrir’s statement about price hike in August, Abdullah said: "He said 'might be'. Anything to do with (fuel) subsidy, the final decision will be made this Wednesday."

It is expected that little notice will be given to the public should the government decide to increase prices at the pumps in order to avoid the hoarding of petrol.

New mechanism in place

According to Shahrir, the increase in fuel prices will be in tandem with the implementation of a new mechanism in the fuel subsidy scheme currently enjoyed by Malaysians.

He was reported saying that there were already several proposals and they have since been submitted to the Finance Ministry.

Although the fuel price would go up, Shahrir said the petrol subsidy would now be based on income instead of usage.

Presently, the more you use, the more subsidy you get. However, the new system will see the subsidy going to lower income groups. But it is unclear how this could be done.

One proposal is to produce two different grades of petrol, with the higher grade, which is used by more expensive cars, be given less subsidy.

While there appeared to be confusion between the deadline fixed by the prime minister and his two other ministers - significantly one being his deputy finance minister - a Shahrir’s aide said that the Wednesday announcement “is only a temporary measure”.

“The measure to be announced would just be for June and July until a permanent decision is made for August,” said the official, creating even more confusion to the Malaysian public.

Earlier today, Shahrir clarified a statement made by Deputy Prime Minister Najib Abdul Razak, who said that the ban on the sale of petrol to Singapore-registered vehicles had been put off .

According to Shahrir, the ban which was implemented yesterday for Thai-registered vehicles, will be imposed on Singapore-registered vehicles on June 9.