PETALING JAYA: Cross-industry leakages and smuggling of subsidised fuel will continue even with the targeted fuel subsidy scheme kicking in next year, says the Petrol Dealers Association of Malaysia (PDAM).
Its president Datuk Khairul Annuar Abdul Aziz said the big price difference between Malaysia and its neighbouring countries would be the “pull factor” for smugglers.
He said it was likely that cross-border smuggling to Kalimantan and cross-industry leakages from retail to commercial would continue.
“The difference between the retail and commercial price will cause cross-industry leakages with parties buying commercial fuel at retail prices if there is a big price difference, ” he said.
Khairul Annuar said fuel smuggling was an issue that the government needed to address to stem wastage of government funds.
“What I know from the last time we had a discussion, this issue occurs mostly in international waters via ships, ” he said.
According to GlobalPetrolPrices.com, as of Monday, petrol costs RM4.98 per litre in Thailand, RM2.94 in Indonesia and RM2.08 in Malaysia.
In May last year, Thailand announced that it would use its state oil fund to help consumers cope with rising fuel prices.
The Indonesian government compensates state energy holding company Pertamina for selling premium gasoline below market price.
In Malaysia, since February this year, the government capped the prices of RON95 petrol and diesel at RM2.08 and RM2.18 per litre respectively. The government will implement the Targeted Subsidy Scheme (PSP) starting January 2020, which will see RON95 and diesel retail prices being gradually floated.
Finance Minister Lim Guan Eng said the aim was to reduce leakages and cross-border smuggling of subsidised fuel, estimated to cost the government millions of ringgit.
Under Budget 2020, the RM2.2bil PSP will be launched in the peninsula while those in Sabah and Sarawak will continue to enjoy a fuel price ceiling of RM2.08 per litre for RON95 and RM2.18 per litre for diesel.
The subsidy will kick in whenever the RON95 market price determined by the Automatic Pricing Mechanism (APM) is above RM2.08 per litre, but no fuel subsidy will be given when the APM price falls below that price.
The PSP has two eligible recipient categories, the first being for Bantuan Sara Hidup (BSH) recipients where eligible car owners will receive a RM30 monthly subsidy while motorcycle owners will get RM12.
The other category is for non-BSH recipients who will be given Kad95 which allows them to enjoy the fuel subsidy through a discount of 30 sen per litre.
The subsidised fuel for this category is limited to 100 litres per month for cars, and 40 litres for motorcycles when purchasing RON95.
Khairul Annuar pointed out that as long as the petrol price was below RM2.38, Malaysians in the peninsula who are getting the PSP of 30 sen per litre discount would be paying less than those in Sabah and Sarawak.
“For example, if it goes up to RM2.18, effectively people in Sabah and Sarawak will still be paying RM2.08 per litre but the targeted subsidy folk in the peninsula will be paying RM1.88 (because of the 30 sen per litre subsidy), ” he said.
Khairul Annuar said petrol dealers preferred a monthly price review as this would give them time to recover in the event of a big price drop, especially for low-volume stations.
“If the government were to stick to the weekly price review, then PDAM is asking for guaranteed margins and also to be given full control when ordering stock, ” he said.
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