KUALA LUMPUR: The government still bears around RM7 billion in subsidies related to diesel in Peninsular Malaysia, said Prime Minister Datuk Seri Anwar Ibrahim.

He explained that subsidies were not abolished and the diesel subsidy rationalisation is to ensure more efficient management of subsidies so that they are not misused and reach the appropriate groups.

“The main goal of the diesel subsidy rationalisation policy is to ensure that subsidy wastage no longer continues while ensuring that the savings are returned to the wider population,“ he said in a statement today.

Anwar said savings from the implementation of targeted subsidies will certainly be returned to the people in the form of education, health, public transportation and other sectors that have the greatest impact on the public.

According to him, the MADANI Government will also remain committed to combating diesel smuggling while striving for a balance between the government’s efforts and issues of supply and cost of living.

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The Prime Minister said the Ministry of Domestic Trade and Cost of Living (KPDN) launched Ops Tiris on March 1, 2023 to combat the misappropriation of subsidised diesel benefiting parties not eligible for the subsidies.

As of Dec 31, 2023, a total of 6.44 million litres of diesel, estimated to be worth RM14.12 million, has been seized.

Anwar said that due to the positive results and developments of the operation, Ops Tiris 3.0 has been launched with an expanded scope covering other controlled goods, namely refined white sugar (coarse and fine), one kilogramme (kg) polybag cooking oil, RON95 petrol and liquefied petroleum gas (LPG).

“As of June 14, 2024, controlled goods worth RM12.96 million have been seized, with diesel accounting for the bulk of smuggled and misappropriated controlled items,“ he added.

Additionally, he said the price of pure palm cooking oil in bottled packaging has been maintained at RM6.90 (1kg), RM13.30 (2kg), RM19.60 (3kg) and RM30.90 (5kg) since the MADANI government took over leadership, even though the world crude palm oil (CPO) prices have exceeded the threshold price of RM3,890 per tonne.

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Anwar said, for example, with CPO prices at RM4,215 per tonne in March and RM4,256 per tonne in April, the price of 5kg pure palm cooking oil could have risen to RM33-RM35.

On June 9, Finance Minister II Datuk Seri Amir Hamzah Azizan announced that the price of diesel at all retail stations in the Peninsula would be set at RM3.35 per litre, which is the market price without subsidy, based on the May 2024 average according to the Automatic Pricing Mechanism formula starting June 10.

He said the price float and targeted diesel subsidy implementation could save RM4 billion annually while strengthening the country’s financial position in the long term.

Amir Hamzah said the diesel price will be announced weekly according to the current practice of the Ministry of Finance, and the government will continue to monitor the situation to avoid price instability.

However, the subsidy rationalisation does not involve consumers in Sabah, Sarawak and Labuan.