KUALA LUMPUR, Nov 20 — The government will intervene if pump prices for RON95 petrol and diesel remain above RM2.50 per litre for three consecutive months, the Finance Ministry said today.
RON95 and RON97 petrol are currently RM2.38 per litre and RM2.66 per litre, while diesel is retailing at RM2.25 per litre. The ministry said the federal government understood the effect of the rise in global oil prices that have now reached over US$60 per barrel, which it said would affect pump prices locally.
Based on the recent trend of rising global crude oil prices, the government will identify appropriate measures to reduce the impact of this hike, if the retail price for RON95 and diesel exceeds RM2.50 per litre continuously for three months.
“Measures that will be taken will ensure citizens are not burdened with the hike in global oil prices and the inflation rate is under control in the short-term and medium-term,” the ministry said in a statement. In the same statement, the ministry said the government’s move to rationalise fuel subsidies based on the fall or rise of global crude oil prices has successfully trimmed wastage and allowed for targeted subsidies to be given out.
It explained that local retail prices for RON95 petrol and diesel take into account both global crude oil prices and currency exchange rates. The current mechanism to determine prices is based on a weekly system, where the prior week’s average change in costs for petroleum products will determine the price for the following week.
“If the global crude oil price increases, then the retail price for petroleum products will also increase; conversely the retail price will reduce if the global crude oil price falls,” the ministry said. It added that the government was still providing subsidies for the public transport sector and fishermen, as well as for LPG or cooking gas. The National Economic Council was reported to be meeting today to discuss options to deal with the recent fuel price hike.
On November 9, the weekly prices for RON95 and RON97 petrol went up by six sen and seven sen respectively to RM2.31 per litre and RM2.60 per litre ― reportedly the highest since the weekly fuel pump price system was introduced in late March. Diesel at fuel stations went up by three sen to RM2.20 per litre, reportedly the second highest under this pricing system.
This week, RON95 and RON97 petrol prices again went up, this time by seven six and six sen respectively to RM2.38 per litre and RM2.66 per litre. Diesel went up by five sen to RM2.25 per litre. The prime minister had previously said Malaysia had spent almost RM29 billion on subsidies for RON95, RON97 petrol and diesel in 2013 prior to its abolition since 2014.