Diesel retail sales dropped 30% for the first week after announcement on retargeting of subsidy

Friday 22 Nov 2024

KUALA LUMPUR (June 24): Total diesel retail sales at petrol stations have decreased by almost eight million litres per day, or nearly 30% for the first week (June 10 to 17), after the announcement of retargeting the implementation of diesel subsidy, compared to the week before (June 1 to 8), said Finance Minister II Datuk Seri Amir Hamzah Azizan on Monday.

“For the same period (from June 10 to 17), commercial diesel sales increased as much as four million litres a day, which signals that some of the use of subsidised retail diesel over the years [was by] the sector industry that should buy diesel at market price.

“This means that the increasing trend of commercial diesel sales reflects a positive sign that the leakage of subsidised diesel has reduced,” he said in his speech on the implementation of the retargeting of diesel subsidies in Parliament.

Amir Hamzah said that among information received from one of the oil companies, diesel sales at the country borders showed a 40% decline.

“This confirms that [previously], there were activities of diesel smuggling into the country at our borders,” he said.

He said that the enforcement agencies are actively working together and organising the movement of various operations to curb smuggling activities and any element that affects the stability of supply of goods and services, as well as to curb the elements of profiteering in the market.

Last year, a total of 877 cases were handled under OPS TIRIS 1.0 and 2.0, involving a total seizure of around 6.44 million litres of diesel with an estimated value of over RM14.2 million, according to Amir Hamzah.

This seizure also involves assets and equipment such as vehicles, hoses and diesel suction tools, which is estimated to be worth RM42.1 million. This action had also enabled the authorities to successfully arrest 667 individuals suspected of being involved in embezzlement activities and the leakage of national subsidies.

On Jan 1, 2024, these operations continued under the framework OPS TIRIS 3.0, and up to June 22, 2024, 570 cases had been handled, involving the seizure of more than 5.1 million litres of diesel with an estimated value of almost RM12 million, as well as RM46 million worth of seized assets and equipment, and 275 arrests were made on the individuals involved.

Following up on the decision to rationalise diesel subsidies from early June, the Ministry of Domestic Trade and Costs of Living (KPDN) had also mobilised OPS KESAN 2.0 to monitor the impact of the implementation, and to ensure that there are no elements of profiteering occuring, in accordance with the law under the Price Control and Anti-Profiteering Act 2011.

As of June 20, 2024, a total of 2,100 premises had been inspected throughout the country and of that number, 210 written notices under Section 21 of the Price Control and Anti-Profiteering Act 2011 had been issued to dealers nationwide. Until now, as many as seven cases have been identified as a result of the implementation of OPS KESAN 2.0.

Further, since January, almost 30,000 inspections had been carried out and enforcement agencies have begun to identify cases that involve offences under the Supply Control Act 1961, due to suspicion of trying to export controlled, subsidised goods to neighbouring countries.

With the implementation of the retargeting of diesel subsidies, it is projected that the government can achieve an annual savings of RM4 billion, Amir Hamzah said.

The government still bears diesel subsidies of up to RM10 billion, including to cover subsidies in Sabah and Sarawak (RM3 billion), subsidies for the public transport sector and the Peninsular Malaysia logistics sector (RM4 billion), cash assistance for individual vehicle owners and small agri-commodity entrepreneurs (RM2 billion), as well as fishermen's diesel subsidies (RM1 billion).

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