May 27, 2010 16:22 PM
KUALA LUMPUR, May 27 (Bernama) -- The government may fork out a staggering RM200 billion to subsidise petrol and diesel prices in the next 20 years unless fuel prices are raised, Minister in the Prime Minister's Department, Datuk Seri Idris Jala said on Thursday.
Fuel subsidies represent 5.0 to 44 per cent of Malaysia's fiscal deficit (and) "it is a huge burden for the country," he said when opening the Subsidy Lab Open Day here to receive feedback from the public on subsidies.
With Malaysia consuming more fuel compared with other countries in the region, he said "Malaysians need to be aware that we are one of the highest subsidised nations."
The difference between the pump price and actual market is subsdised, he said in his remarks to members of the public at the lab.
The lab comes under PEMANDU, the Performance Management and Delivery Unit of which Idris is the chief executive officer.
He said that crude oil price, currently hovering at US$71.51 per barrel, is expected to continue to increase to US$75.37 this year.
Idris said that the fuel subsidy should be reviewed because it mainly benefits the middle and high income groups.
"There are a lots of leakages. Malaysia will be a net importer of petroleum products by 2011 (and) the subsidy bill will increase to about RM200 billion in next 20 years," he said.
Idris said that the subsidy rationalisation lab studying the impact of subsidies on the economy has recommended that petrol price (RON 95) be raised by 15 sen from RM1.80 per litre to RM1.95 per litre between June and December this year.
The subsidy for RON 95 is currently at 44 sen per litre.
As for diesel sold at RM1.70 now, he said it should be increased by 10 sen.
The subsidy for diesel now amounts to 40 sen.
As for Liquefied Petroleum Gas (LPG), which was priced at RM24.50, it should be raised to RM27.
Idris said that petrol price should be increased 10 sen per litre gradually every six months and a 20 per cent incease in LPG price every year.
He said there should be a gradual reduction in subsidies so as not to burden the people.
The time is right to raise petrol prices as world crude oil price is relatively low at around US$71.65 per barrel, he added.
-- BERNAMA
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