RON95 price freeze an election ploy

Tarani Palani | May 26, 2011

The DAP secretary general is almost certain that there will be an increase in essential items once BN wins impending general election.

PETALING JAYA: Penang Chief Minister Lim Guan Eng said the government’s decision to maintain the prices of RON95 petrol, diesel and liquefied petroleum gas is an election ploy.

“The BN government has not given up on reducing subsidies to increase prices on essential items,” said Lim, who is also DAP secretary general.

“Once the snap election is won by BN, then clearly nothing would stop them from removing subsidies and allowing prices of essential items to increase,” he added.

“Deputy PM Muhyiddin Yassin said a review will be necessary as the government expects the subsidy burden to double from RM10.32 billion to RM 20.58 billion this year,” he said.

Domestic Trade, Cooperatives and Consumerism Minister Ismail Sabri Yaakob said the decision to retain the prices was made at yesterday’s weekly Cabinet meeting.

However, Ismail could not specify the time frame of how long the prices would remain at the current rates. The price of RON95 petrol is now RM1.90 per litre and diesel at RM1.80 per litre. LPG is priced at RM1.90 per kg.

The decision to retain the petrol prices will cost the government RM18 billion, a figure double that of last year’s fuel subsidy which was RM8.15 billion.

Anti-corruption policy

Lim attributed the freeze in petrol prices partly to the electoral strength of Pakatan Rakyat and that pushing for more subsidy cuts will only result in the BN losing support.

On May 4, RON97 petrol went up to RM2.90 – up 20 sen since the last increase in April. Five days later, sugar price went up by 20 sen to RM2.30 per kg.

The price increases are a part of the government’s plan to reduce expenditure on subsidies, and the rumours of a hike in RON95 drew flak from many quarters, including Umno Youth.

Lim said that unless the BN adopts an anti-corruption policy, the target of 5.4 % fiscal deficit could not be achieved without further subsidy reductions.

He said that although the BN conceded that corruption cost at least RM28 billion annually, the anti-corruption policy is unlikely when the government lacks transparency.

He added that only by supporting Pakatan Rakyat (PR) can the people ‘kill two birds with one stone’ i.e. by stopping corruption but also stopping price increases.