The rise in diesel price, from RM2.20 per litre to RM2.23, was due to the fuelâ€™s high cost of production, even more so than refining RON95 petrol.
Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hasan Malek said the high production cost meant that the government could not afford to lower the price of diesel and left it with no choice but to increase its price by three sen.
Speaking to the New Straits Times last night, Hasan said the move was only decided upon after detailed study and discussions.
â€œThe price of global crude oil is going down, but we need to process it (the crude oil) to make it into RON95, RON97 and diesel.â€
Hasan said the pricing system at petrol stations was fixed through the Automatic Pricing Mechanism (APM), prior to the implementation of a managed float system.
â€œMany had questioned on why was there an increase in diesel price, as compared with a reduction in RON95 price due to the fall in global crude oil market prices.â€
He said the reason for the hike in diesel price was because it was based on average fuel prices for November.
â€œThe price of RM2.23 per litre was based on the average price for November, while the previous price of RM2.20 per litre was fixed prior to the implementation of the managed float system.
â€œThe price for December, meanwhile, was based on average calculation as of Nov 27.
â€œShould there be any changes in terms of world crude oil prices, it will be streamlined with the pricing for the following month.â€
Hasan denied reports which quoted him as attributing the diesel price increase to the high subsidy paid out for diesel by the government previously.
The government had in a statement on Sunday announced that effective yesterday, the price of RON95 would be reduced by four sen, bringing the price to RM2.26 per litre, while RON97 would cost RM2.46 per litre, down from RM2.55.
The price of diesel, however, saw a three-sen increase from the current RM2.20 per litre.
Meanwhile, at a function in Kampar yesterday, Hasan told reporters that critics only commented on the increase in diesel prices, but failed to remark on the reduced price of petrol.
â€œThey did not mention the price of RON95 and RON97, which has dropped.â€
Hasan allayed fears that the price of diesel would continue to see an increase in the future.
â€œWe will monitor the global fuel price monthly to set the retail price for the following month. There is a possibility the price may come down.â€
Responding to a question, Hasan said the current fleet card system, which enables public transportation companies to buy diesel at a subsidised price, would be continued.
â€œWe are, however, studying new approaches following feedback from the people.â€
Hasan urged traders to lower the prices of their goods in view of lower petrol prices.
Meanwhile, Pan-Malaysia Lorry Ownersâ€™ Association (PMLOA) president Jong Foh Jit expressed dismay at the increase in diesel price.
â€œThe government announced that if the world crude oil price rises, RON97, RON95 and diesel prices would also rise.
â€œHowever, the price of crude oil has declined, causing RON97 and RON95 to decrease by nine and four sen, respectively.
â€œDiesel price, on the other hand, increased by three sen per litre,â€ he said in a statement yesterday, deeming the move as â€œunacceptableâ€.
Jong said PMLOA was hopeful that diesel price would decrease, as world crude oil price declined to less than US$70 (RM239.20) per barrel.
â€œThe government had already raised diesel price by 20 sen per litre on Oct 2 before the introduction of the managed float system, effective Dec 1 (yesterday).
â€œWe urge the government to explain to the public, especially lorry owners, just how the managed floating system works.â€-NST