KUALA LUMPUR: The government has decided to reinstate the Automatic Fuel Pricing mechanism to determine fuel prices on a weekly basis.
Finance Minister Lim Guan Eng confirmed the adoption of the former managed float system while announcing the new petrol rates which will take effect from midnight today until Jan 11.
“We are doing this to allow consumers to enjoy any drop in prices quickly in line with the global trend of declining oil prices,” he said in a statement here today.
The retail prices of RON95 and RON97 petrol, as well as diesel have been reduced. RON 95 will be sold at RM1.93 (27 sen lower) per litre, RON 97 at RM2.23 (27 sen lower) per litre, and diesel at RM2.04 (14 sen lower) per litre from tomorrow until Jan 11.
“The announcement of retail prices will be made every Friday and comes into effect from Saturday to Friday,” Lim said.
He said the decision was made in the cabinet meeting on Jan 2 and took into account the views of all stakeholders including the concerns of the Petroleum Dealers Association of Malaysia (PDAM).
“They met with the Prime Minister Tun Dr Mahathir Mohamad and requested that their margin as opeators be revised to add another 2.81 sen to make it 15 sen a litre for RON 95 and an additional 3 sen per litre for diesel (to 10 sen).
“The last time this margin was reviewed was in 2008,” said Lim.
He also said the government would be committed to carry out fuel price stabilisation policies to benefit Malaysians.
“This means when petroleum prices fall in the global market the retail price of petroleum products will also be lowered to allow consumers to enjoy the benefits of lowered fuel prices quickly. But when the prices of the global market goes up the retail price will be capped at RM 2.20 for RON95 and RM2.18 for diesel, per litre respectively.
“This new cap is an initiative of the Federal Government under Pakatan Harapan and has not been done before. This policy will be in place until the RON95 (targeted) petrol subsidies come into effect in the middle of the year before the retail price is floated in a managed way based on market prices.”
The Pakatan Harapan administration has maintained the price of RON95 at RM2.20 per litre since assuming federal administration in May. The last time the price of RON95 was changed was on March 22 under the weekly-managed float system implemented by the BN administration.
The system has been in place since December 2014 following the withdrawal of government subsidies.
Under BN’s pricing system, there was no cap on retail prices but they were frozen in the weeks leading up to the 14th general election.
At that time, the price of crude oil was about US$69 (about RM285) per barrel. Currently, the price of crude oil is around US$52 (about RM215) per barrel.