In 2019, under the Pakatan Harapan government, the ceiling price of RON95 petrol and diesel (Euro2M) were set at RN2.08 and RM2.18 per litre, respectively. The move was to shield the economy from the effects of high fuel prices which could cause inflation. The capping of fuel prices meant that when oil prices rose and retail prices should have been higher, the government subsidised the different to keep them at the promised levels. That cost hundreds of millions of ringgit a week at times.
After a new government took over without any general elections, the prices of oil fell quickly due to the global pandemic. So there was no need for any subsidies from the government as pump prices kept falling to very low levels.
Lower levels than before
But oil prices are now creeping up again, and pump prices are likewise increasing a few sen each week. Nevertheless, the government will still provide subsidies to maintain a ceiling price for RON95 petrol and diesel as before. However, the ceiling price per litre has been revised to a lower level – RM2.05 for RON95 petrol, RM2.15 for diesel.This was announced by the Minister of Finance this evening. He said the government remains committed to reducing the cost of living of the people and will always monitor the impact of changes in world crude oil prices.
“The government will also take appropriate measures to balance the government’s subsidy burden with the need to continue to preserve the welfare and well-being of the people,” he said, adding that the decision was taken based on the rising market price of petroleum products following the increase in world crude oil demand.
“It was also influenced by the reopening of various economic sectors around the world. Furthermore, the global oil price trend is also influenced by the COVID-19 vaccination plan which is starting to be rolled out gradually around the world,” he added.
Based on Automatic Pricing Mechanism
The prices each week are based on the Automatic Pricing Mechanism (APM) which takes into account various factors and is adopted by the government and industry. RON97 and RON100 petrol are not subsidized and generally follow global oil price trends while for Euro5 biodiesel, a 10 sen charge per litre is permitted at the pumps for the significantly cleaner fuel.
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