The weekly managed fuel float pricing system kicks in at midnight today, with RON95 petrol costing MYR1.93 per litre, a drop of 12.3 percent. According to Finance Minister Lim Guan Eng, petrol price announcements will be made every Friday, and updated pricing takes effect on Saturdays.
The new price of diesel is MYR2.04 per litre, down 6.4 percent. Meanwhile, the price of RON97 petrol will cost MYR2.23 per litre, a reduction of 10.8 percent.
The weekly managed float system was first introduced during the Barisan Nasional administration in March 2017.
Following the regime change post 9 May general election, the Pakatan Harapan administration had pegged the RON95 price at MYR2.20 per litre through the second half of 2018.
The government is committed to ensuring consumers pay less if global oil prices are down.
However, should global oil prices go up, RON95 and diesel will be pegged at MYR2.20 per litre and MYR2.18 per litre respectively.
Proposed weekly float of fuel prices created concern among representatives of the Petroleum Dealers Association of Malaysia (PDAM). PDAM had asked the government to raise fuel sale commissions for fuel station operators to reduce any loss of margins they may face due to fuel price floats.
Following a meeting between Prime Minister Dr Mahathir Mohamad and representatives of PDAM, the cabinet had agreed to increase margins for petrol dealers. Fuel margins had remained unchanged since 2008. The new allowable margin for RON95 petrol is 15 sen per litre, up 23 percent, while diesel is now 10 sen per litre, an increase of 42 percent.
The government has also pledged to implement a targeted fuel subsidy scheme in mid-2019. This was announced at the tabling of Budget 2019 last year. The targeted fuel subsidies will benefit Bottom 40 (B40) households and will be applicable to cars with engine capacities of 1,500cc or less, and motorcycles of 125cc or below.
Each eligible car and motorcycle owner can enjoy up to 100 litres and 40 litres of RON95 petrol per month. The subsidy covers at least MYR0.30 per litre, subject to the market price of petrol.
The scheme is expected to benefit four million car owners and 2.6 motorcycle owners, and will cost MYR2 billion to the government.