Muhyiddin: Diesel prices will cost public more than govt saving RM4b

 

Former premier Muhyiddin Yassin has raised concerns that the blanket diesel subsidy removal in the peninsula may end up costing the public more than the RM4 billion the government is saving from the move.

The Perikatan Nasional chairperson warned that the price shocks across the supply chain were inevitable.

“The sudden diesel price hike will cause an economic shock that will spread across the country and create a multiplier effect on other economic and social sectors.

"This burden, if assessed, may cost the public far more than the RM4 billion saved from this subsidy targeting. Is this worth it?” Muhyiddin said on Facebook today.

The government removed diesel subsidies at the pump effective today, with the retail price now at RM3.55 per litre compared to the subsidised price of RM2.15 per litre.

However, private consumers who are eligible will get RM200 per month in lieu of subsidies.

This, Muhyiddin said, was not enough.

“For those eligible for assistance, RM200 per month is certainly insufficient to cover the significant increase in diesel prices.

"Ultimately, the cost increase in the supply chain will still occur and be fully borne by consumers," he added.

He warned that the situation will only worsen when blanket RON95 subsidies are also removed.

Finance Minister II Amir Hamzah yesterday said that data indicated the RM200 payout for private diesel users would be sufficient for 80 percent of recipients.

He also said that diesel vehicle owners can appeal to the government if they believe otherwise.

SKDS

Besides cash transfers to private users, there are also additional subsidy initiatives for those in the agriculture, fishing, logistics, and public transportation sectors.

One of the initiatives is the Diesel Subsidy Control System (SKDS), which gives fleet cards to public transport operators, as well as logistics vehicles.

Under SKDS, the price of diesel for public transportation is RM1.88 per litre, while for logistics vehicles the price is maintained at RM2.15 per litre.

The government argues that with most sectors covered, businesses should not increase prices by citing higher diesel costs.

Muhyiddin, however, expressed doubt that the SKDS can stop price hikes in the supply chain as it only covers certain vehicles.

The application process for SKDS is being done in phases, and not all eligible companies have received their fleet cards yet.

The government has advised these companies to keep their receipts for reimbursement later. - Mkini