The government has decided that from Dec 1, the retail price for RON95 petrol and diesel will be based on the managed float.
This method is similar to the implementation of the RON97 retail price since July 2010.
Since 1983, the retail price of petroleum products in Malaysia is determined by the Automatic Prime Mechanism (APM).
The government will set the retail price at a certain rate via the APM, whereby the change in product cost will not affect the retail price.
However, through managed float, the average product cost will determine the price for the following month.
This means that if the world crude oil price increases, the retail price of RON95 petrol and diesel will also increase, or vice versa.
From Nov 1 to 19, the average RON95 price under APM declined to RM2.27 per litre, which was lower than the retail price of RM2.30 per litre.
The government will monitor the market price from Nov 20 to 31, and the actual amount will determine the average retail price in December.
Should this trend continue, it is expected that the RON95 retail price for December will be reduced accordingly, based on the APM formula.
At present, the retail price at petrol stations for RON95 is RM2.30 per litre and diesel is RM2.20 per litre.
Beginning Dec 1, the price of fuel is determined by the method mentioned above.
The government will be following the market product cost price development and the currency rate to determine the price of petrol and diesel.
The decision for the managed float of RON95 petrol and diesel was made after the success of RON97.
This method has proven the government’s intention to ensure the people benefit fully from the drop in the world crude oil price.
Research on the implementation of managed float for RON95 petrol and diesel was carried out by the government before this decision was made.