Petronas Bukit Jelutong
The scene at Petronas Bukit Jelutong, 7:49PM 4th June 2008

The following are the new prices of petrol effective from midnight tonight:

  New Price Old Price
RON97 Petrol RM2.704 per litre RM1.92 per litre
RON92 Petrol RM2.62 per litre RM1.88 per litre
Diesel RM2.581 per litre RM1.58 per litre

UPDATE: Despite the PM’s announcement saying RON97 will be priced at RM2.70, motorists found out today that the actual price at the pump is RM2.704. It looks like the PM’s department could have been overenthusiastic over the whole 5 sen rounding up mechanism that was launched recently, even applying it to their announcements. Diesel price is also not RM2.58 per litre, but RM2.581 per litre.

The new price of RM2.70 includes a 30 sen government subsidy, so it is reduced from what the Prime Minister says is a market price of RM3.00 per litre. The 30 sen subsidy will be a fixed amount of subsidy that will subsidise the market rate.

The market rate will be reviewed every month. This means the market rate is RM4.50 per litre next month, we will be paying RM4.20 per litre for fuel, and if it is RM7.00 per litre, we will be paying RM6.70 per litre.

The government will be giving an additional subsidy of RM625 a year for cars with engine displacements 2000cc and below litres (joy for Mercedes-Benz C200K and E200K owners with their 1.8 litre engines, I suppose), and pick-up trucks with engine capacities up to 2,500cc. Motorcycles under 250cc will get a subsidy of RM150 per year. RM625 is said to be an equivalent of 800 litres a year, which is roughly 78 sen per litre.

Basically for the first 800 litres of fuel used per year, you’ll still be paying the old price of RM1.92 per litre. 66 litres per month is the equivalent of nearly 2 full tanks for a small compact car, or just over 1 full tank for a typical sedan. Payment of the subsidy will be made via postal order to be issued when you renew your car’s road tax annually, and payment processing will begin on the 1st of July 2008.

For those who do not qualify for the subsidy, there is some reduction in road tax prices. For cars with engine displacement of above 2000cc, road tax will be slashed by RM200. Motorcycles above 250cc will have their road tax slashed by RM50.

These changes are only temporary. As mentioned by Datuk Shahrir Samad yesterday, this will only be step one in the final plan in restructuring the way we purchase fuel in our country. These prices are still controlled prices – future prices will be a floating market rate that is not capped by the government.

The government will be moving towards abolishment of the fuel subsidy in the future, so we’d better just get used to these new prices. There is already a hint in the Prime Minister Office’s announcement which states that the cash subsidy will be for vehicles with road tax expiring between the 1st of April 2008 until the 31st of March 2009. What happens after that?

READ: Full announcement at Prime Minister’s Office Website

UPDATE: The Ministry of Domestic Trade and Consumer Affairs has lifted the ban on foreign cars refilling their fuel tanks at petrol stations 50km from the country’s Thailand and Singapore borders. Foreign cars can now refuel as they wish.