Government think tank proposes fuel hikes – 15 sen this year and RON95 to cost RM2.60 by 2015

May 27, 2010

PEMANDU, a government think tank led by Minister in Prime Minister’s Department Idris Jala tasked with formulating proposals to reduce the country’s government subsidy budget has recommended a petrol price hike of 15 sen for RON95 and 10 sen for diesel.

This is the petrol price hike schedule which we’ll be looking at, based on a crude oil forecast of US$73.06 per barrel in 2011 and the region of between US$79.41 to US$94.52 per barrel between 2013 and 2015.

Current 2010 Price – RM1.80 per liter RON95
·    Q3/Q4 2010 Price Hike – RM1.95 per liter RON95
·    2011 Price Hike – RM2.16 per liter RON95 (broken into 2 hikes, once per 6 months)
·    2012 Price Hike – RM2.20 per liter RON95
·    2013 Price Hike – RM2.34 per liter RON95
·    2014 Price Hike – RM2.52 per liter RON95
·    2015 Price Hike – RM2.60 per liter RON95

These are just the proposed hikes for RON95. RON97 was not mentioned in the recommendations, which indicates that the government is further decreasing priority on RON97 subsidies. We could see a price of way over RM3 per liter for RON97 by 2015.

Not only that, the proposal recommends that the government renegotiate the PLUS toll concession contract this year and the LDP contract by 2013, then all toll concession agreements must proceed without any subsidies, resulting in a toll hike of between 10% to 67% depending on the highway, distance, etc from this year onwards.

For those dreaming of a future of driving electric cars, electricity tariffs are to be untouched for those using less than 200 kWh for this year. However gas prices are proposed to be increased by RM3/MMBTU every 6 months, which will translate to an electricity increased of 1.6 sen/kWh every 6 months. If we take the Nissan Leaf’s 24kWh battery as an example, that’s a RM0.38 hike per full charge for the Nissan Leaf every 6 months. LPG, which is priced at RM24.50 has been proposed to be hiked to RM27 with a 20% price increase every year.

The proposal also spells out a “mitigation plan” which involves giving cash rebates of 126 ringgit for owners of cars with engines smaller than 1,000cc in capacity, and 54 ringgit for owners of small motorcycles. My reference source doesn’t mention of this is one time, monthly, or yearly. There is also a proposal for a 20% discount on toll charges for frequent users and a cash rebate of RM20 for anyone with a Malaysian IC – not sure what this cash rebate is for but I’m assuming it’s for fuel?

According to PEMANDU this will save the government about 3 billion ringgit this year, 14 billion ringgit next year, 21 billion ringgit in 2012, 29.5 billion ringgit in 2013 and 35 billion ringgit in 2014. These plans are yet to be approved by the government.