PUTRAJAYA – From Dec 1, RON95 petrol and diesel prices will be set according to the managed float system, Minister of Domestic Trade, Cooperatives and Consumerism Datuk Seri Hasan Malek announced today.
He said the managed float system which was decided by the cabinet Friday, is the same system used to set the retail price of RON97 petrol since July 2010, he said.
“Consequently, from Dec 1 onwards there will be no more subsidy for these two fuel products anymore as the world market price is lower than the price at the pump,” he said.
Through the managed float system, he said the average price difference in the products’ cost will determine the price for the following month.
“This means, if the price of world crude oil increases, so will retail prices of RM95 and diesel and vice-versa,” he told a press conference here.
The current price of RON95 is RM2.30 per litre and diesel is RM2.20 per litre.
Hasan said the retail price for petroleum products in Malaysia was set through the Automatic Price Mechanism method since 1983.
Through the APM, the government sets the retail price at a certain level whereby the price change in the product will not affect the retail price.
Hassan gave an example by quoting the average price of RON95 recorded in the world market between November 1 and 19 at RM2.27/litre as compared to the retail price of RM2.30/litre at petrol pumps (in Malaysia).
He said the prices for RON95 and diesel on Dec 1 will depend on their average price in the world market during November.
“For this, the government will monitor the market price from Nov 20 to 30 and the actual amount will determine the average retail price in December,” he said.
Hasan did not rule out the possibility of RON95 retail price being lower than it is currently if the world oil market prices kept showing a downward trend.
“If this trend continues, it is expected the price of RON95 and diesel for the month of December will be reduced accordingly based on the APM formula,” he said.
Responding to a question, Hasan said the retail price for RON95 and diesel would be set according to the managed float method, on a monthly basis.
He said the government will monitor the development of the market price, product cost, world market price, and the currency exchange rate to set the retail price of petrol and diesel.
“We will monitor the world market on a daily basis but we will take the monthly average, and then, the government will decide if the price needs to be increased or decreased.
“The price may fall or it may rise, but the trend in the past few months has been showing a stable decreasing trend,” he said.
Hasan said the government had carried out studies on the implementation of the managed float system for RON95 petrol and diesel before deciding on going ahead with it.
“This proves the government’s intentions of ensuring that the public fully benefits from the reduction of world crude oil prices,” he said.
Asked whether the implementation of this system was final, he said the government was proactive and sensitive to the current situation based on the world market price and Organization of the Petroleum Exporting Countries (OPEC) output.
“Our approach is to put the people first. So whatever we can save is for the people’s welfare,” he said. – Bernama