With effect from today, RON95 petrol and diesel prices have gone up by 20 sen per litre.
With this subsidy reduction, the government estimates that it still needs to spend over RM21 billion for RON 95 petrol, diesel, and liquid petroleum gas (LPG) subsidies for 2014.
However, the Government has allocated RM22.341 billion for petrol, diesel and LPG subsides in the 2014 Budget. So the first question is, where did the balance of RM1.341 billion go to?
When the Government was calculating the figure for petrol subsidy, we were subsidizing RON95 at RM0.71 per litre. However, ample global oil supplies have weighed on crude oil prices in recent months, sending Brent, the global benchmark, to below USD100 a barrel for the first time in 16 months. Even before the subsidy reduction, the Government could have save a lot following the oil price fall.
According to the Domestic Trade, Consumer Affairs and Cooperatives Ministry, the market price at the moment is RM2.58 per litre for RON 95 petrol. This means with the subsidy cut, the Government will now only subsidy RM0.28 per litre for RON 95 petrol.
Malaysians need to know where the money saved from the subsidy cut go to.