The new weekly fuel price float system – which was supposed to go live today but is now scheduled to start later this week – will see RON 95 petrol prices capped at RM2.20 per litre, even if crude market price pushes the pump price beyond that level. This was revealed by finance minister Lim Guan Eng, reported by The Star.

Lim said the price float system was different from the previous government’s. “People will be paying less when petrol price drops but when it increases, they need not worry as any increase exceeding RM2.20 will be subsidised by the government,” he told reporters in Bukit Gelugor yesterday.

He explained that the implementation of the weekly price float was delayed because of objections from the Petrol Dealers Association of Malaysia (PDAM), adding that prime minister Tun Dr Mahathir Mohamad would hear the group out first before deciding on the prices, which would be announced after a cabinet meeting today.

PDAM president Datuk Khairul Annuar Abdul Aziz stated his case last week. “As dealers, we have no control over the price. Say we buy petrol today, if the government changes the price tomorrow, we have to follow that even if we had bought (the fuel) at a higher price. Unlike other businesses where they can still keep a margin, we can’t, as we are at the mercy of the government. So, let’s say the price goes down every week, we are then hit (with losses) four times a month,” he said.

“So we can’t even buy less stock; our hands are tied. If the reduction is gradual and doesn’t eat up our margin on a daily basis, then it would be okay but the government needs to discuss with us. It’s right that the government wants to give that (lower fuel prices) to the rakyat and we are all for that, but if we continuously sell at a loss, matilah (we will suffer),” he said, adding that the dealer margin is 10 sen per litre for petrol.

This system won’t be for the long run, though – it will only be in place until a fleet card system is introduced for B40 (bottom 40% lower income) Malaysians to buy subsidised RON 95 petrol. This impending end of the current blanket fuel subsidy was announced in Budget 2019, but the mechanism and criteria is yet to be finalised.