The government had always asserted that diesel subsidy rationalisation is to stem leakage, and that much of our diesel is smuggled out of the country due to the big difference in the fuel’s price between Malaysia and its neighbours. Now, we have some figures and they’re mind-bogglingly massive.
According to finance minister II Datuk Seri Amir Hamzah Azizan, at least 6.5 million litres of diesel were misappropriated by industries or smuggled into neighbouring countries daily before targeted diesel subsidy was implemented.
June 10 was the day that Malaysia’s diesel pump price jumped 56% to RM3.35 per litre overnight, and subsidy reform resulted in a 23%, or 6.5 million-litre, reduction in daily sales at petrol stations in Peninsular Malaysia, Amir Hamzah said, noting that in early June, average daily diesel sales was 28.6 million litres. Early this month, it has dropped to 22.2 million litres.
There’s also another trend. “This conclusion is supported by data showing that daily commercial diesel sales have increased by 4.8 million litres over the same comparison period. Given that the current price at petrol stations is RM3.35 per litre, industries that previously purchased subsidised diesel have now switched to commercial diesel,” the senator told Dewan Negara yesterday, reported by Bernama.
The drop in diesel sales is even more apparent in the northern Peninsular Malaysia states. Amir Hamzah said that some petrol stations near the Thai border have experienced a drop in diesel sales of up to 40 to 50% since targeted subsidy started. “This situation reflects a decrease in smuggling activities to the neighbouring country due to reduced profit margins for smugglers,” he added.
Earlier this month, domestic trade and cost of living (KPDN) minister Datuk Armizan Mohd Ali said cases of diesel seizure are down by 87%, based on cases in the 20 days prior to June 10, and the 20 days after that.
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