RON-95-Petrol

Youth and sports minister Khairy Jamaluddin has confirmed that fuel subsidies for RON 95 petrol has returned for the month of July, according to a report by The Rakyat Post.

He said that the government had to allocate RM100 million to subsidise the fuel, claiming that without it, the price per litre of RON 95 petrol would have jumped by as much as 20 sen in July. Instead, the price rose by 10 sen to RM2.15 per litre at the beginning of the month.

RON 95 June pricingSyukri’s tabulation of RON 95 petrol cost and pricing in June

However, in another report, the online news portal wrote that the subsidy would probably have been in place at least since June, due to the drop in value of the Ringgit against the US Dollar, according to blogger Syukri Shah. Currency rates play a vital role here, as the base cost of the refined fuel, derived from the Mean of Platts Singapore (MOPS), is expressed in US Dollars.

His calculations showed that the average cost of the RON 95 petrol calculated through the Automated Pricing Mechanism (APM) last month was RM2.29 per litre, 24 sen higher than the retail price of RM2.05. On the other hand, Syukri denoted that the average cost of diesel over the same period was RM2.04, one sen less than the price at the pumps, so it’s unlikely that it was subsidised.

Diesel June pricingSyukri’s tabulation of diesel cost and pricing in June

Then again, the price of fuel in Malaysia is based on a managed float system, derived from the average cost for the last 10/11 days of the previous month, so it stands to reason that the APM pricing that Syukri listed is only really relevant for July.

This more or less ties in with Khairy’s claim that the price of RON 95 petrol would have risen by 20 sen without subsidies, and explains why the price of diesel is unchanged at RM2.05 per litre.