KUALA LUMPUR: AT least seven companies have submitted their proposals to the government on the fuel subsidy rationalisation mechanism to address abuses and ensure only deserving parties benefit from it.
A source familiar with the proposals told the New Straits Times yesterday that the companies included two foreign-based entities, one of which is based in Singapore, and another linked to a former cabinet minister.
“The proposals are diverse. Each company is proposing a different mechanism for the government to consider and adopt in its fuel subsidy rationalisation exercise to curb abuses which has cost the government billions of ringgit in losses due to leakages.”
The source said each company had proposed to use either the MyKad, Fuel Card and Smart Card as the platforms to plug the loopholes in the current subsidised fuel distribution system.
“Other proposed platforms include Biometric, cash and coupon.
“Each platform, however, will trigger a different impact on the capital expenditure and upfront payment to be borne by the government, ranging from RM200 million to RM1 billion.”
Some companies had also proposed that they are given total ownership and control of their system hardware and database.
“However, this is highly unlikely to be considered by the government due to the amount of confidential personal data involved, especially to the foreign-based and Singaporean companies.”
The proposals were submitted to the Road and Transport Department, Economic Planning Unit, Ministry of Finance and Domestic Trade, Cooperatives and Consumerism Ministry.
“Each proposal covers mechanisms on how the government can effectively address abuses and facilitate practical implementation of the distribution of subsidised fuel to more than 10 million Malaysians,” the source said, adding that the government was reviewing the proposals.
Last year, the government spent RM9.92 billion on diesel subsidy alone. The figure more than doubled the RM4.03 billion it spent in 2010. At the same time, the government lost 3.5 billion litres in subsidised diesel to smugglers.
It also lost 6 billion litres of subsidised RON95 to leakages last year. The government had banned the sale of RON95 to foreign-registered vehicles, except motorcycles, since Aug 1, 2010.
Several quarters have been urging the government to reevaluate the distribution of the RON95 subsidy, saying there is a pressing need for a more efficient system to ensure only those eligible for the subsidy receive it.
A nationwide survey by a non-governmental organisation also revealed that more than 50 per cent of Malaysian luxury car owners used the subsidised fuel.
The survey also found that motorists in luxury foreign-registered vehicles also opted for subsidised RON95 fuel instead of the unsubsidised RON97.
Early this month, Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek was quoted as saying the final decision on the mechanism to be implemented for fuel subsidy distribution would be made by the cabinet.
The ministry, he added, was also gathering ideas and proposals for the government to decide on the best mechanism that could benefit all parties.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah had also said the new fuel subsidy rationalisation programme, if approved by the cabinet, would be good for the people as the savings would be channelled to the target group.
On June 9, the government imposed a six-month freeze on all applications involving wholesale diesel and petrol licences, and the opening of new petrol stations.
The freeze also applied to those who wanted to get permits for the wholesaling and storage of fuel for industrial and domestic consumption, including for shipping vessels.
The move was to allow the government to study the best way to tackle leakages that take place throughout the supply chain of subsidised fuel (from storage depots and petrol stations to wholesalers).
The government on May 15 launched a massive exercise, Op Titik, to bring to book subsidised diesel smugglers, which has so far recorded seizures worth more than RM6 million.