Archive for Malaysian Fuel Prices

As previously revealed, Phase 1 of the RM625 fuel subsidy disbursement has been on-going since the 14th of June 2008. This is for people with cars with engine displacements up to 2000cc, trucks up to 2500cc and bikes up to 250cc whose road tax was renewed between the 1st of April 2008 and the 31st of May 2008. Has anyone eligible claimed their RM625 fuel subsidy yet? Please do share your experiences in the comments section of this post.

I have just renewed my road tax via MyEG and they told me I should expect it in my mail tomorrow. Interesting thing is I actually renewed it for half a year only, so I suppose my road tax will expire twice within the subsidy period! (UPDATE: For those who renew for half a year only, you will only be able to claim your subsidy when you renew your NEXT half year.) For those of you like me who qualify for the subsidy but have a road tax renewable from the 1st of this month until the 31st of March next year, you can collect it from the 1st of July 2008 onwards.

There’s no need to hurry as according to Pos Malaysia the deadline to collect it is the 31st of March 2009, but for those with road tax expiring the 31st of March 2009, you’ll have to rush to collect it on the day itself! I think it should be extended for those eligible folks whose road tax expires on the last day of the collection period.

For those collecting the subsidies, you can speed up the process a little by printing out the claim form and filling it at home before you head out to the post office. Just download the form via the link below and fill it up.

Fill in your name, address and phone number under the Penerima section. Now here’s where special instructions are needed.

• Under the Sender section, fill in your IC and under the Sender’s Address section, write your car registration number.
• In the table on the right, write the amount of subsidy you are entitled to under the Jumlah section.
• In the receipt section at the bottom of the form, cancel the Pengirim and write Penerima, and fill up your name.
• The same goes for the word Pengirim under the MyKad number section.
• Under MO Amount section, write your car registration number.
• Then write the amount of subsidy you are entittled to receive under the Total Payment.

You can then queue up. The officer at the counter will ask you to put down your left hand thumbprint above the subsidy amount on the table on the right in the form. The whole process excluding filling up your form should only take about 3 minutes, according to Pos Malaysia. It’s the lining up that will take time.

DOWNLOAD: Subsidy Claim Form
DOWNLOAD: List of Post Offices in Malaysia

Related Posts:
How and when can you claim your RM625 fuel subsidy?

As all of you probably know by now, those who own a car with an engine displacement of 2000cc and below, and have a road tax disc which will be renewable from the 1st of April 2008 and the 31st of March 2009 will be eligible to a RM625 cash subsidy in the form of a postal order.

Those who have already renewed their road tax between the 1st of April this year up to the 31st of May 2008 will be able to pay a visit to one of 683 post offices nationwide and claim your cash subsidy. For those whose road tax expires after the 31st of May 2008 all the way up to the 31st of March 2009, collection of subsidy can be done from the 1st of July 2008 onwards.

All you need to do is bring your IC and the post office will look it up in the JPJ database to see if you qualify for the subsidy. Identity will be verified using fingerprints, and you will be paid in cash. Money orders will be mailed to those who send an appointed third party to claim the subsidy.

UPDATE: There is one additional piece of information which I believe has not been released before. A person can only receive subsidies for a maximum amount of 5 vehicles, which can be a combination of motorcycles, trucks or cars. If you have more than 5 vehicles, you will not get subsidies for all of the vehicle’s road tax.

For more information click the two links below:
Petrol Subsidy Claim Fact Sheet
Petrol Subsidy Claim Process Flowchart

RELATED READ:
Oil prices and subsidies: an explanation by the National Economic Action Council

Datuk Shahrir Samad reveals a little more on what went behind the doors at the Cabinet Committee on Inflation meeting, which resulted in fuel prices to be revised to RM2.70 per liter for RON97 fuel and the formation of a new subsidy payment of RM625 for cars with engines below 2000cc.

He also gives a preview on what to expect next when it comes to how we buy our fuel and how much we pay for it.

• The government decided to increase the price immediately instead of the before-mentioned August date as calculations revealed that if they had waited any longer, the price increase would have been different.

• The government was considering three quantums of increase: RM0.50, RM0.78 and RM1.00, which would have resulted in fuel prices of RM2.42, RM2.70 and RM2.92 respectively. Initially the committee favored RM1.00, but RM0.78 was picked because rather than setting it at RM2.42 and increasing it again to RM2.92 soon later, a one-time increase was preferred so that it has to be swallowed once.

• The RM2.70 per liter price for RON97 fuel is expected to stay for awhile (note that this does not mean a confirmation, what more in these times of conflicting government statements), with further increases in crude oil prices to be absorbed by the government. The market price for fuel will only be implemented sometime in the future where fuel prices will be reviewed every month and will be set at market price minus a fixed RM0.30 per liter subsidy.

• The RM625 cash subsidy via postal order plan is a one-off thing because for subsequent years there will be a new way to implement the subsidy with more controls as the current system has many holes in it, but was chosen because it was the quickest to implement.

• A new system based on quotas will be introduced next. The current cash subsidy is based on a 66 liter per month consumption (calculated over 10 months). The suggestion is that the new quota system would also assign 66 liters of fuel per month, but it will likely be based on a person rather than on a per-car basis as it is currently with the road-tax based system. This closes the loophole of someone having multiple cars but only really driving one enjoying more subsidies than he should be getting.

• The way to determine who should get the subsidies is still being finalised, but a MyKad-based system or something based on some other kind of card will be used to identify the person as qualified to get subsidies at the pump… apparently this year. I think the directors of ePetrol have valid reasons to be smiling in their sleep now.

The picture that Datuk Shahrir paints seems to be one of the government’s coffers running dangerously dry, so dry that urgency of reducing subsidy expenses seemed to be placed at the highest priority.

It’s sort of implying that waiting just two months and continuing to pay subsidies at the previous level for an additional two months would have such a devastating effect that even a RM2.70 petrol price could not be sustained for the next 1 year.

It’s either that or the government is playing it safe and is doing a subsidy bill projection taking into account further massive hikes in crude oil prices.

Sources: 1, 2, 3, 4, 5, 6

When the Prime Minister’s Office released the full announcement on the new petrol and diesel prices for Malaysia as well as the new subsidy structure last week, it was mentioned that the RM625 subsidy would be issued for cars (and RM125 for bikes) with road tax renewable between the 1st of April 2008 until the 31st of March 2009, with payments to be issued via postal orders from July onwards.

At that point we were unsure on what this meant as it seemed to indicate that the RM625 subsidy was a one-off thing only.

Second Finance Minister Nor Mohamed Yakcop has cleared up this uncertainty on the subsidy, clarifying that it is indeed a one-time payment only, and not a yearly thing as some had hoped. Anyone who is planning to cheat the system and try to profit from a yearly subsidy scheme by stocking up on old cars that are nearing scrap-metal condition can forget about it now.

It is still not clear at the moment whether cars and bikes with engine displacements above 2000cc and above 250cc respectively would have their road tax cut by RM200 and RM50 permanently, or just for one year as with the fuel subsidy.

Price controls are supposed to be lifted in August, which is when fuel price controls are to be lifted and allowed to be determined by market rates, free of government restrictions. The government will maintain an RM0.30 per liter subsidy on whatever the price is, which means if the market rate is RM7, we will pay RM6.70 per liter. With crude oil prices touching a record high of US$139.12 a few days ago, its anyone’s guess what August’s fuel prices will be like… and I shudder to think how much it’ll cost to refuel next year.

I guess compared with our per capita income, cars are now officially a luxury and thanks to our pathetic public transport system, a necessity at the same time! We will have to find alternate ways to cut our fuel bill without relying on public transport, such as minimizing travel and car pooling.

UPDATE: Datuk Shahrir Samad says the current prices of RM2.70 per liter will be maintained until March 2009, so there will not be any lift of price controls in August 2008. However looking at the government’s flip flop style of dissemination of information, this intention may change anytime in the future without warning.

Related Posts:
New Petrol and Diesel Prices Effective 5th June 2008

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

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

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 liter, but RM2.581 per liter.

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 liter. 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 liter next month, we will be paying RM4.20 per liter for fuel, and if it is RM7.00 per liter, we will be paying RM6.70 per liter.

The government will be giving an additional subsidy of RM625 a year for cars with engine displacements 2000cc and below liters (joy for Mercedes-Benz C200K and E200K owners with their 1.8 liter 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 liters a year, which is roughly 78 sen per liter.

Basically for the first 800 liters of fuel used per year, you’ll still be paying the old price of RM1.92 per liter. 66 liters 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.

As you are reading this, the Cabinet Commitee on Inflation meeting regarding our country’s fuel subsidy system has already been running for about more than half an hour. The results of this meeting will be announced possibly later today and be implemented starting from tomorrow, according to the PM. There has been a few updated bits and piece of info released by the media today, hinting at what the final restructured fuel subsidy plan will be. Here is what we know at the moment:

• The government is currently studying two methods of delivering subsidies – based on cash income and based on quota. What has been repeated many times in the past is that those who can afford to pay market rates should pay for them so I think we can assume that subsidies based on cash income is a go, but the question here is whether those who qualify for subsidies will have a quota set on how much subsidies they can enjoy. I think quotas make sense to prevent someone with subsidies to profit from selling subsidised fuel on the black market to those who do not qualify for subsidies. Someone with low income should also get just enough subsidies for the bare necessities of commuting, this is to discourage wastage of subsidised fuel.
• The PM wishes for the new subsidy structure to be implemented from tomorrow onwards, but I think we can realistically see it some of it implemented tomorrow and the rest in stages leading towards a full implementation in August.
• There will also be no controlled prices for fuel in August 2008 onwards. This means that the market price will be determined by the fuel companies. This could also lead to different stations offering different prices for fuel.
• We still do not know whether fuel tax will be added to the market price for petrol As a higher market price is already a big shocker for most people, what I think is that the initial market price will not have fuel tax, but fuel tax may be added later.
• The ban at the northern border preventing foreign cars from filling up is now in effect, with the Singaporean border ban to be applied later. This ban only affects cars. Foreign-registered motorcycles can still fill up their fuel unrestricted.

UPDATE 3:37PM: Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad says that the full new subsidy system cannot be decided immediately, so only initial details will be announced tomorrow, with the full picture to be unveiled in August 2008. He also added that the fuel subsidy mechanism could involve the following methods: a) cash income subsidies b) quota system tied to MyKad or car registration number.

With this latest piece of news, a market price at pump for petrol may not be introduced from Wednesday onwards as previously indicated. The market price is likely to be truly insane compared to what we are used to – in the high RM3 range, close to RM4 per liter.

UPDATE 8:15PM: Buletin Utama TV3 mentioned that according to calculations using a crude oil price of USD130 a barrel, the market price for a liter of RON97 petrol would be RM3.12, and this would not include a potential fuel tax.

Minister of Domestic Trade and Consumer Affairs Datuk Shahrir Samad announced today that petrol prices at the pump may most likely increase in August 2008, two months from now. Details on the price hike and fuel subsidy are still sketchy, but here is what we know at the moment.

• A new subsidy system will be implemented based on need rather than use.
• The keyword of need rather than use indicates that a person with high income, despite choosing to use a very fuel efficient car will still not qualify for subsidies.
• What we know is that some will have to pay a higher market price for unsubsidised fuel, but we do not know if the subsidised RM1.92 price will remain or increase.
• Diesel prices will also go up, and based on previous reports the hike could be higher than the petrol price hike.
• The unsubsidised market price fuel sold at the pumps may be sold at cost plus profit which is already high enough, but there is also the possibility for the government to include fuel tax which will drive the price up higher.

If tomorrow’s cabinet meeting goes well, we will be able to know full details on what the new fuel price and subsidy plan is on Wednesday.

These are truly worrying times when even heavily subsidised Brunei is considering reducing subsidies, a move that will increase the price of fuel in Brunei, which currently stands at B$0.53 per liter, or about RM1.22 per liter. But Brunei’s move is more of an energy conversation and environmental issue, as the cheap fuel prices have made most Bruneians wasteful with the usage of the precious commodity.

8:15PM UPDATE: The Prime Minister announced that the new revised fuel subsidy plan will take effect immediately from Wednesday onwards to “avoid any speculation.”

8:20PM UPDATE: Datuk Shahrir Samad was asked by Reuters to comment on the PM’s earlier announcement that the new fuel subsidy structure would take immediate effect. Datuk Shahrir only said that Wednesday’s announcement would be an incremental step towards a total restructure in August and did not elaborate further.

The issue on whether petrol pumps in border towns can sell fuel to foreign-registered vehicles is still unclear, as different people in different ministries seem to be saying different things, all within the span of a few days.

Domestic Trade and Consumer Affairs Ministry Datuk Shahrir Samad was originally reported to say that the sale of fuel to foreign cars will be banned from Friday the 30th last month onwards, but on Friday his ministry issued a letter saying that the ban would only come into force this week for the Thai border towns, and on June 9th for the Singapore border towns.

On Sunday, Deputy Prime Minister Najib Tun Razak said the decision on whether and when to curb foreign cars from filling up will only be decided tomorrow (Tuesday). So for the moment, the fuel business should be able to go on as usual at the border towns.

The announcement of a new fuel subsidy plan is not likely to happen anytime soon as the cabinet meeting to discuss the subsidy issues as revealed by Second Finance Minister Tan Sri Nor Mohamed Yakcop last week did not happen. Deputy Prime Minister Najib Razak told Bernama yesterday that several ministers were not able to make it to the meeting, and a few others requested that the meeting be postponed. The cabinet will meet again on this coming Wednesday, so let’s hope the discussion happens this time.

Second Finance Minister Nor Mohamed Yakcop mentioned earlier this week that the subsidy pan will be unveiled before the Budget 2009 meeting, which will happen on the 29th of August 2008. This means the new subsidy plan will happen anytime within the next 3 months.

In other fuel related news, the Domestic Trade and Consumer Affairs Ministry (DTCAM) has released a letter stating that a ban on selling fuel to foreign cars will only come into effect next week instead of yesterday, and it would only apply to the northern area within 50km from the border. The ban down south 50km from the Singaporean border will only start on the 9th of June 2008.

More after the jump…

Click here to read the rest of New fuel subsidy plan in the next 3 months!

You may be wondering about the strange headline for this post. If you have been reading papers for the past few days, you would be aware of the whole Bandar Mahkota Cheras and Cheras-Kajang Expressway barricade issue.

Basically, the gist of it is that the residents of Bandar Mahkota Cheras have been using a recently constructed link road to enter the highway which allowed them to bypass the Batu 11 toll plaza. Using the link road, their journey is shorter and they would only have to pay toll at the Batu 9 toll plaza. This of course reduces revenue for the highway’s concessionaire, Grand Saga Sdn Bhd.

So Grand Saga put up a barrier, blocking the link road. The result: residents of Bandar Mahkota Cheras have to pay the additional toll at the Batu 11 toll place, but that’s not all.

According to the Malay Mail they have to travel an additional 6km because of the detour. In times where the government is bleeding from fuel subsidies, the Cheras-Kajang Expressway barricades block a link road that shortens commuting distance, so more fuel is consumed.

On a car that consumes 8 liters per 100km, an additional 6km means an extra 0.48 liters of fuel consumed per journey, or 14.4 liters of fuel a month. Multiply this by a thousand residents who drive and that’s 14400 liters of fuel. Multiply that by 12 months – 172800 liters of fuel wasted a year. Oh, and I almost forgot… multiply that by a two way journey and you get 345600 liters per year.

Assuming a subsidy of RM1 per liter, that’s RM345,600 of government cash spent per year per 1000 residents. Two factors would inflate the actual total number even more, the fact that there are so much more than 1000 residents in that area and the fact that a lot of cars consume more than 8 liters per 100km.

Another inflating factor would be the fact that a non-highway detour route would most likely have lots of slow, stop-and-go traffic, increasing fuel consumption significantly. We may be looking at an actual figure of 12 to 15 liters per 100km.

Do the math!

The government has banned all petrol stations within 30 to 50km from the Malaysia-Thailand border and the Malaysia-Singapore border from selling fuel to foreign cars beginning this Friday (30th May 2008) onwards. This would include all petrol stations in Perlis, Kedah, North Perak, Kelantan, and several Johor distrincts. Offending petrol station owners would be fined up to RM250,000 or jailed 3 years or both.

I know that there are some people, especially those who live in the northern states who buy and register cars in Thailand, but drive them around in Malaysia. They would certainly be in a fix as now they would have difficulty filling up their fuel tanks, as even though they are Malaysian and their cars are being used in Malaysia, their number plates are foreign. I can think of a probable but illegal solution they’d come up with: fake local number plates?

This ban is only temporary until a permanent solution is introduced to prevent fuel subsidies from being enjoyed by those who are not intended to receive them.

In the same report by Bernama, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad said that the Federation of Malaysian Consumers Associations (FOMCA) has suggested petrol subsidies to be given out based on engine size would be considered. This seems logical as first as the rich would have cars with larger engines, but with the world engine trends moving towards displacement downsizing and the likeliness of the rich being able to access this latest technology in the first place, it is another idea which in practice is not going to be completely effective.

As it is the popular Mercedes-Benz E200K and C200K uses 1.8 liter engines, and the large Volkswagen Passat is available with a 1.4 liter engine. That is smaller than a Proton Persona’s engine in terms of displacement.

Second Finance Minister Tan Sri Nor Mohamed Yakcop revealed last week that the new scheme for subsidised fuel will be revealed in a few month’s time by the Prime Minister, and will benefit low to middle-income earners, with the rich having to pay more together with all the higher tax brackets that they are already paying.

The Cabinet Committee on Inflation will be meeting tomorrow to discuss various measures on how to solve the problem of increasing fuel subsidy costs, which according to current calculations, will amount to RM45 billion this year based on an oil price of US$120 per barrel.

Indonesia is tackling the situation by providing cash relief directly to the poor – an amount of US$1.5 billion in total. On the 24th of May 2008, Indonesia raised the prices of fuel products by up to nearly 30%.

Under the cash relief scheme, US$10 will be given every month over the next 1 and a half years to 19 million families, hardly enough to compensate for the rise of the fuel itself and the domino effect it will have on other products like food.

Source 1, Source 2

Those who attended the World Congress on Information Technology 2008 (WCIT 2008) this week may have spotted this display by ePetrol Sdn Bhd. While the company was more friendlier and interested in demoing to Datuks in suits rather than the more plebian-looking visitors such as yours truly, I manage to overhear a demo to one example of a well dressed Datuk-looking person.

The ePetrol petrol kiosk is basically a way to pay for your petrol via the MyKad. You first link your MyKad to your bank account (I assume it can be linked to a credit card as well if needed), then you use your MyKad to pay for petrol at the petrol station. The cash will be deducted from the bank account associated with your MyKad account.

The ePetrol team demonstrated a way that fuel subsidies could be controlled and given to Malaysians only. Basically, the petrol kiosk displays and charges the unsubsidised market price for petrol by default. When an ePetrol-enabled MyKad is inserted, the subsidised price will be available. The receipt shows both the unsubsidised price and the subsidy given.

This is one of the possible implementations that could change the way we fill up our tanks in the future.

According to Berita Minggu, Domestic Trade and Consumer Affairs Minister Dato’ Shahrir Samad says Malaysians may soon have to present their identity cards at petrol stations before being able to fill up their fuel tanks with subsidised petrol. Everyone else would have to pay an unsubsidised market price for petrol.

One way of implementing this could be enabling the credit card readers at kiosks to verify that a valid MyKad has been inserted into the reader as all of the readers have been updated to accept and read chip-based cards some time ago, but this could be prone to abuse. The other way would be having manual verification by petrol kiosk attendants, though this would be a slight annoyance to motorists wanting to refuel quickly and go, but it would be a small price to pay to get subsidised prices.

In another report, former PM Tun Dr Mahathir claimed that at the current rate Malaysia would not be able to afford any form of petrol subsidy by 2014.

Source

The government has opened a Request for Proposal to all quarters for suggestions on how to implement a more suitable diesel subsidy scheme that is more effective in preventing abuse and wastage, according to Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad.

The government will then announce the new subsidy plan in about 6 weeks time, with implementation to take effect in 6 months time. It seems that if the newly implemented diesel subsidy plan is found to work well, a similiar one will be cooked up for petrol subsidies as well, so both users of petrol and diesel vehicles should brace for some big changes in the next few months up to the next 2 years.

Any good ideas?

Related Posts:
Diesel at pump may have subsidy removed!
Proposal for new fuel structure: subsidised RON95 and unsubsidised RON99

Source