This article first appeared in The Edge Financial Daily on January 4, 2019

KUALA LUMPUR: The ministry of finance yesterday denied that the government had been taxing petrol, pointing out that the total petrol and diesel subsidies for the first 11 months of 2018 amounted to RM4.89 billion.

“Total petrol and diesel subsidies for the first 11 months of 2018 amounted to RM4.89 billion, and the Pakatan Harapan-led government has neither profited from retail petrol pump prices nor imposed sales tax on RON95 or diesel. Allegations that the government has been taxing petrol are false and baseless,” said Finance Minister Lim Guan Eng in a statement.

“The simple truth is that the government did subsidise RON95 and diesel in November, albeit at a lower cost compared to the previous months,” he added.

He said the latest official records show the government paid RM4.1 million in RON95 petrol subsidy and RM209.1 million in diesel fuel subsidy for the whole of November 2018, bringing total fuel subsidies paid out to RM213.2 million.

For comparison, the government paid out a total of RM961.2 million — comprising RM534.9 million and RM426.3 million for petrol and diesel subsidies respectively — in October and RM897.2 million in fuel subsidies in September.

On average, the government paid out RM444.56 million per month in fuel subsidies over the 11-month period.

The finance minister also said the government is dedicated to transparency, adding that if and when the automated pricing mechanism (APM) prices drop further, the government will accordingly adjust the pricing downward for the benefit of Malaysians.

“As shared earlier, the government is implementing a floating mechanism in January 2019 where pump prices will fall on a weekly basis if APM prices decrease further. If APM prices rise, retail prices would be stabilised at the current fixed levels of RM2.20 per litre for RON95 and RM2.18 per litre for diesel,” said Guan Eng.

Once the government rolls out its targeted petrol subsidy programme before the end of 2019, petrol and diesel prices will be floated freely based on market prices, he added.