Targeted fuel subsidy plan excites market

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KUALA LUMPUR: Companies in the running for the lucrative contract to manage the country’s fuel subsidy rationalisation scheme are back in the limelight after Finance Minister II Datuk Seri Ahmad Husni Hanadzlah revealed that the government intends to split the fuel subsidy entitlement into three tiers, based on an individual’s monthly income.

Following his announcement, shares in Datasonic Group Bhd grew 3.77% or six sen to RM1.65, with some 3.75 million shares traded, representing a year-to-date share price growth of 52.5%.

Datasonic entered into an agreement in June to acquire a 30% stake in Fuelsubs House Sdn Bhd, deemed the front runner for the targeted fuel subsidy scheme management job for RM10 million.

It was reported that Tan Sri Syed Mokhtar Al-Bukhary’s Pos Malaysia Bhd had formed a joint venture with Datasonic and Fuelsubs for the project.

Fuelsubs, registered in November 2013, is about 70% controlled by Habibul Rahman Kadir Shah, and almost 25% by Datuk Razali Merican Naina Merican, while some 5% of it is controlled by Zaid Kedershah.

Datasonic’s share price surge yesterday indicated a telling signal of investor confidence in Fuelsubs securing the contract this time. This is believed to be the same reason, which once led to a rally in Datasonic’s share price earlier this year, with the counter reaching a high of RM2.39 on April 1.

Fuelsubs has been reported to be close to clinching the deal in the past few months, but The Edge Financial Daily, in an Aug 19 report, said the government was holding back the contract on concerns that awarding it via direct negotiation would raise the question of objectivity.

The winner has still not been announced but investors appear to be excited by the impending fuel subsidy rationalisation scheme even as its finer details are still being worked out.

Another relatively big name touted to be a main contender for the job is Dialog Group Bhd, which has a ready system for the implementation of the project using the MyKad. The company has also proposed a cashless payment system for low-income households through MyKasih as an alternative.

Pos Malaysia’s share price closed at RM5.00, one sen lower on thin trading volume. Dialog’s share price, on the other hand, remained unchanged at RM1.69.

Meanwhile, Ahmad Husni said those who are earning RM5,000 per month will receive full subsidy while those earning between RM5000 and RM10,000 will get partial subsidy. There will be no subsidy entitlement for those earning more than RM10,000 a month.

Putrajaya aims to set up a “special body” to monitor the implementation of the new scheme and it will also verify the subsidy entitlement of car owners, he told reporters after officiating at a Bank Rakyat International Islamic conference.

Ahmad Husni gave an assurance that the Domestic Trade, Cooperatives and Consumerism Ministry is still studying the scheme to sort out the finer details of the implementation.

 

This article first appeared in The Edge Financial Daily, on October 28, 2014.