Published: Tuesday November 18, 2008 MYT 1:49:00 PM
Updated: Tuesday November 18, 2008 MYT 3:43:07 PM - The Star
Govt has stopped paying petrol subsidies: Shahrir
By ROYCE CHEAHKUALA LUMPUR: The Government has stopped paying subsidies for petrol since the beginning of this month due to lower global oil prices, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad said.
“The savings on petrol subsidies next year is expected to be more than RM10bil if oil prices remain stable,” he told reporters Tuesday at the Parliament lobby here.
Elaborating, Shahrir said that at a price of US$65 per barrel, the Government would not be paying subsidies and that the focus now would be on deciding whether to set a floor price or figuring out a way for the Government to get some income from the sale of petrol.
“Even with petrol retailing at RM2 per litre, we are not paying any subsidies. We have actually arrived at a time when the price can return to RM1.92.
“In that context, we hope to be able to set a policy to address this when the National Economic Council next meets. A decision must be made on the floor price.”
Shahrir said that for six months from September 2001 to February 2002, the Government had collected taxes from the retail sale of petrol and had stopped that practice since February 2002.
“Earlier announcements of how much the subsidies cost us, even as recent as 2005 or 2006 always included how much we had to forego in terms of taxes. We have stopped doing this however and just focused on how much subsidy we are paying.”
Shahrir said the Government was now enjoying some revenue due to the difference in the ex-refinery price and the price oil companies sell petrol to station operators.
He added that the revenue being taken now was a form of tax that could max out at 60sen per litre.
“After the station operators take their margin of 12.1sen and the oil companies take their margin of 19.1sen, we are left with RM1.69 from RM2.
“If the refinery price is RM1.30 per litre for example, the Government will be taking 39sen per litre as revenue.”
Shahrir also released information on the amount of fuel subsidies paid so far which have amounted to RM15.57bil as at the end of October.
Fuel subsidies last year cost the Government RM16.18bil.
The fuel subsidies in October amounted to RM610mil as compared toRM2.99bil in May when oil prices peaked at over US$120 per barrel.