PETALING JAYA: Petronas Dagangan Bhd (PetDag) has expressed support for the government’s plans to shift to a targeted fuel subsidy framework in light of elevated global oil prices.
PetDag managing director and CEO Azrul Osman Rani revealed that the group is in discussions with the finance ministry on the issue.
“We understand the current predicament with the high global oil prices impacting the country as well as other nations,” he told the media during a virtual briefing after PetDag’s AGM yesterday.
“We understand that the government is looking at various initiatives, including targeted subsidies, namely to look at the Bottom 40 (B40) and perhaps the Middle 40 (M40) segments, and we will support and continue to work with the government as well as the overall oil and gas industry that is operating in Malaysia.”
He said there are still several discussion points that need to be finalised and ironed out and PetDag will be working closely with them to ensure a smooth and sustainable model that the country can adopt.
Replying to a question on the group’s performance after the reopening of borders from April 1, Azrul hinted that PetDag had quite a good first quarter this year.
He said its commercial division involved in the trade of aviation fuel saw significant improvement in first-quarter 2022 compared with the same quarter of the previous year.
Nonetheless, he acknowledged there are many other factors that affect the business.
“It’s not just the volume but the movement of prices, among others, these are the things we are monitoring closely and we are hoping to leverage on our capabilities and infrastructure across all international airports to also serve the customers that would require more jet fuel as the borders opens up.”
On petrol, Azrul noted that the equivalent prices of RON95 in Malaysia’s neighbours are roughly RM5 per litre in Thailand and close to RM10 per litre in Singapore.
RON95 is sold at its ceiling price of RM2.05 per litre in Malaysia for the week of April 21 to 27.
Last month, Finance Minister Datuk Seri Tengku Zafrul said the government’s fuel subsidy bill could reach RM28 billion this year, more than double the RM11 billion spent in 2021.
In 2017, the government introduced the Automatic Pricing Mechanism for fuel subsidies at a variable rate subject to a price ceiling. In March 2021, it raised the ceiling to RM2.05 for RON95 and RM2.15 for diesel. At that time, global benchmark Brent crude was trading at around US$61 a barrel; currently it is trnding slightly above US$100 (RM435).
