Malaysian petrol price to jump 40 percent: PM

AFP - Thursday, June 5 KUALA LUMPUR, June 4, 2008 (AFP) - Malaysia's petrol price will rise 40 percent to 2.70 ringgit (0.84 dollars) a litre from Thursday as controls are removed under a revamped subsidy system, the prime minister said. "Effective from tomorrow, 5 June 2008, the price of petrol will be raised by 78 sen and the price of diesel will be raised by 1.00 ringgit," Prime Minister Abdullah Ahmad Badawi told a press conference. "The new price of petrol will be 2.70 while the new price of diesel will be 2.50," he said. Petrol currently costs 1.92 ringgit (0.60 dollars) at the pump, among the cheapest in Asia. Domestic Trade Minister Shahrir Samad said that under the new scheme, drivers of smaller vehicles will receive a cash payment to offset the rising costs. "For cars 2000cc and below, they will get back 625 ringgit in cash payments as a form of direct subsidy," he said, adding that this equated to subsidising some 800 litres of fuel. Shahrir said that the new price of 2.70 ringgit did not reflect the full market value, which could be as high as 3.00-4.00 ringgit when the price controls are completely removed in August. He said that the increase would impact on inflation, which came in at 3.0 percent in April. "With this hike, the CPI (consumer price index) is expected to rise to 5.0 percent" this year, he said. The minister said that without the new measure, the government's actual payout for oil subsidies would have totalled 28 billion ringgit this year, and that it will now save some 4.0 billion ringgit. Malaysia has already moved to ban sales of subsidised fuel to Thais and Singaporeans who make trips across the border to fill up their tanks. "We want to pay the subsidy directly to those who deserve them. We do not want foreigners to benefit from our subsidy," Shahrir said.