PUTRAJAYA’S recent announcement that it will intervene to lessen the impact of rising fuel prices is proof that Prime Minister Najib Razak admits to the suitability of Pakatan Harapan’s proposed targeted fuel subsidy model, said PKR vice-president Rafizi Ramli.
Last night, the government announced it would step in if RON95 and diesel prices exceeded RM2.50 per litre for more than three months.
Rafizi said Najib’s U-turn on the issue of fuel subsidies was proof that the economic model mooted by PH, which would reintroduce fuel subsidies for low-income earners, was the right move.
“I am the most satisfied person with the decision because finally, Najib has put aside his ego and political importance to admit that a subsidisation method which is carried out with a ceiling price has to be implemented, ” he said in press conference at Parliament today.
The Pandan MP explained how easy it was to reduce fuel prices, but this was never acknowledged by Najib.
“My calculations show that when global crude oil prices reach US$64 per barrel, the formula used by Najib’s administration will set RON95 at RM2.50 per litre.
“The price (for crude oil) today is US$62.16 per barrel, and in this month, crude oil prices reached US$64.27 per barrel.
“This means the prospect of RON95 being RM2.50 a litre is not something unusual and can happen in the coming weeks.”
He said for an average US$1 increase per barrel, 40% of the increase would be paid directly to the federal government in terms of royalty, petroleum tax and others, excluding profits from Petronas, and other taxes and paid dividends.
Rafizi criticised the abolishment of the subsidy, saying it was equivalent to the federal government taking all the profits from the fuel price increase, whereby all the excess income from the price hike was not returned in the form of a fuel subsidy for the public.
“The excuse that the profit made is returned in the form of BR1M (1Malaysia People’s Aid) is not applicable because the same excuse was used to explain why GST (goods and services tax) had to be implemented.
“To me, what was paid as BR1M was through GST, and the profit gained from the increase in fuel prices should have been returned (to the public) in the form of a fuel subsidy.”
He estimated that Najib’s administration had gained excess income amounting to RM2.5 billion due to the increase in global crude oil prices.
He expressed his disagreement with the statement by Putrajaya yesterday, saying he did not believe that the government would give a fuel subsidy and keep the ceiling price of RON95 at RM2.50.
“Each time the price of RON95 dips to below RM2.50 per litre, although it has been above RM2.50 in previous weeks, it will ‘reset’ the calculation for the three consecutive months, and will allow Najib to keep more excess income without returning a single sen in fuel subsidy. ”
Rafizi urged the government to cancel the requirement for RON95 to cost more than RM2.50 per litre for three consecutive months before it would step in, and instead, introduce a ceiling price of RM2.30 per litre.
He said the weekly subsidy could be funded by using the annual amount of GST collected on RON97, which is approximately RM68 million, to reduce the prices of RON95 and fuel to below RM2.30 per litre.
He said the excess income gained from the increase in global crude oil prices, estimated at RM2.5 billion, could also be used to pay for the RM47 million needed a week to to maintain the ceiling price of RM2.30 per litre.
RON95 and RON97 are currently priced at RM2.38 and RM2.66 per litre, respectively, while diesel is retailing at RM2.25 per litre.