Gov't cuts petrol, diesel prices by 6.1%

Prime Minister Abdullah Ahmad Badawi today cut fuel prices, the third time in as many months, to track falling world oil prices and in a bid to curb rising inflation in the country.

Effective midnight tonight, pump prices of petrol RON97 would be lowered by 15 sen to RM2.30 per litre. RON92 will be reduced by 10 sen to RM2.20 per litre, while diesel will be lowered by 20 sen to RM2.20 per litre.

"The government decided to speed up the reduction in retail prices so that the people can enjoy the benefit sooner," Abdullah said in a statement issued this afternoon.

Since hiking prices by 41 percent in June, the government has cut fuel price once in August and the second time in September.

RON97 was RM1.92 per litre in June before the hike.

New mechanism

Meanwhile, Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad said oil price adjustments may be decided outside the cabinet to speed up the process of aligning pump prices with international markets and to make sure the benefit is passed down to consumers as soon as possible.

Shahrir also said he had suggested to Abdullah and his deputy Najib Abdul Razak, who is also finance minister, that fuel price adjustments need only be decided collectively by the prime minister, finance minister, second finance minister and the domestic trade and consumer affairs minister.

"I've suggested this new mechanism... to speed up the decision-making process. We only need to inform the cabinet," he was quoted as saying by Bernama.

Shahrir said Abdullah had seemed positive about the proposal. Asked when the new mechanism could be implemented, he said, the cabinet would discuss the matter on Friday.

Asked on the proposal by Gerakan that the fuel price be monitored and reviewed on a weekly basis, he said, the government had in fact been monitoring the price on a daily basis.

"If it is on a weekly basis, the reduction will not be significant. At the moment, we are taking a 30-day average," he said, adding that the monitoring period for price adjustments should be done at a reasonable interval.

Meanwhile, Shahrir said the move by some petrol stations to cancel orders for fuel for fear that the price might go down, would not affect the supply as the stations involved were not many.

"There are many other petrol stations in the country (which have been replenishing their supply) and furthermore, fuel is a controlled item and we will ensure the supply will be enough.

"There are petrol stations which have not made orders as they don't want to maintain a huge inventory because they will suffer some losses when the government reduce the fuel price," he said.

Shahrir also said the ministry was cooperating with oil companies by advising them not to supply a huge amount of fuel whenever price reduction was imminent.