A weekly float system will be used to determine fuel price for RON95 from Jan 1 onwards due to the falling global prices of crude oil, says Finance Minister Lim Guan Eng.
Fuel prices in the country will also be lower next month due to this, he said.
With the current system, he said the Government sets fuel prices on a monthly basis, so lower prices would only be reflected the following month.
A weekly float system allows Malaysians to benefit faster from reductions in the fuel prices, he added.
If the world crude oil prices rise, the Government will cap fuel prices to RM2.20 per litre for RON95 and RM2.18 per litre for diesel, he said, adding that the prices will be capped until the targeted subsidy was put into place in 2019.
“This is in line with Pakatan Harapan’s manifesto during the 14th General Election to enhance the economic well-being of the people by enabling them to benefit from the falling oil prices while helping the B40 group with targeted subsidy if oil prices rise,” he added.
He said the Government spent RM5.82 billion in fuel subsidies between May and November.
Lim said as for why prices of fuel did not drop when the world’s oil prices were down, he said it was due to the monthly automatic pricing mechanism (APM) put in place.
He said lower world oil prices now cannot be reflected immediately due to the monthly APM. He gave an example of this month, where the world oil prices had gone down.
Lim said the lower prices could only be reflected the following month.
Hence, the introduction of a weekly APM system from Jan 1, where prices are determined weekly.
“It will allow consumers to enjoy the fall in world oil prices faster,” Lim said.
He added that the current fuel prices are determined based on the Mean of Platts Singapore and current forex rates.
Lim refuted former Prime Minister Datuk Seri Najib Razak’s claim that the Government had imposed a 30 sen tax on every litre of RON95 since November.
He also disputed Najib’s claim that the Government had collected RM120 million per week from the sale of RON95.
Najib had earlier said that Budget 2019 was done when the crude oil price stood at US$72 a barrel and retail price of RON95 stood at RM2.20 per litre, but now that crude oil price was US$52 per barrel, the retail price of RON95 should be at RM1.90 per litre.
“The Pakatan Harapan Government has collected RM120 million tax from the weekly sale of RON95 to the people,” he claimed.
Lim said Najib’s statement was wholly “false” and “slanderous”.
“His slanderous claims are comparable to his earlier claim that 1MDB was profitable when the whole world knew it was the biggest corruption scandal in the history, which has laden Malaysia with an RM1 trillion debt.”
Former PKR vice-president Rafizi Ramli had also asked the Government to review fuel prices weekly rather than monthly.
Following Lim’s announcement, Rafizi said that a weekly float was “the best method”.
“Review it weekly so if prices go down, the people can enjoy (the savings) faster. And have subsidy so that if prices go up, the people are protected,” he said