TEMPO.CO, Jakarta - From December 1, RON95 petrol and diesel prices in Malaysia will be set according to the managed float system, Malaysian Minister of Domestic Trade, Cooperatives and Consumerism Hasan Malek announced on Friday (November 21).
He said the managed float system which was decided by the cabinet on Friday, is the same system used to set the retail price of RON97 petrol since July 2010.
"Consequently, from Dec 1 onwards there will be no more subsidy for these two fuel products (RON95 petrol and diesel) anymore as the world market price is lower than the price at the pump," he said.
Through the managed float system, he said the average price difference in the products' cost will determine the price for the following month.
"This means, if the price of world crude oil increases, so will retail prices of RM95 and diesel and vice versa," he told a press conference. The current price of RON95 is RM2.30 (US$0.69) per liter and diesel is RM2.20 (US$0.66) per liter.
Hasan said the retail price for petroleum products in Malaysia was set through the Automatic Price Mechanism method since 1983. Through the APM, the government sets the retail price at a certain level whereby the price change in the product will not affect the retail price.
Hasan gave an example by quoting the average price of RON95 recorded in the world market between Nov 1 and Nov 19 at RM2.27/liter as compared to the retail price of RM2.30/liter at petrol pumps in Malaysia.
He said the prices for RON95 and diesel on Dec 1 will depend on their average price in the world market during November.
"For this, the government will monitor the market price from Nov 20 to Nov 30 and the actual amount will determine the average retail price in December," he said.
CHANNEL NEWS ASIA | NATALIA SANTI
