05 June, 2008

Fuel price hikes spark protests in Malaysia !

Angry demonstrators took to the streets in three cities to protest against the sharp rise in prices at the pumps (Malaysiakini)

Protests broke out Thursday in Malaysia as consumers reacted angrily to sharp fuel price hikes that could undermine governments in both countries.

Gasoline pump prices in Malaysia jumped 41 percent, while diesel prices rose a stunning 67 percent.

long lines of vehicles formed at gasoline stations overnight to fill up before midnight when the new pricing came into effect, and brawls broke out as some motorists tried to cut in line.

On Thursday, gas stations were mostly deserted. The opposition Democratic Action Party staged a small protest in downtown Kuala Lumpur and vowed more rallies to demand the government back down from the plan.

(Image source : CNA)

PROTES, an anti-inflation coalition of opposition parties and other groups, is planning rallies nationwide which will peak in a mass demonstration in Kuala Lumpur on July 12, said a coalition leader Hatta Ramli.

«We are hoping for 100,000 people to turn up. We want the government to revert to yesterday's price,» said Hatta, who is also a member of the opposition Pan-Malaysian Islamic Party.

But many Malaysians appeared resigned to the cut in fuel subsidies.
«If we don't increase the fuel price now, the economy will go down,» said Chong Wai Ket, a 29-year-old shopkeeper in Kuala Lumpur.

Like many Asian countries, Malaysia, is struggling with a spiraling fuel subsidy bill that may breach 45 billion ringgit (US$14 billion; ¤95 billion) this year as global oil prices skyrocket.

From Che Det :

I believe the people expect the increase of petrol price. But what they are angry about is the quantum and the suddenness. The Prime Minister was hinting at August but suddenly it came two months earlier, just after the ban on sale of petrol to foreigners.

If the increase had been more gradual, the people would not feel it so much. But of course this means that the Government would have to subsidise, though to a decreasing extent.

Can the Government subsidise? I am the “adviser” to Petronas but I know very little about it beyond what is published in its accounts. What I do know may not be very accurate but should be sufficient for me to draw certain conclusions.

Roughly Malaysia produces 650,000 barrels of crude per day. We consume 400,000 barrels leaving 250,000 barrels to be exported.

Three years ago the selling price of crude was about USD30 per barrel. Today it is USD130 – an increase of USD100. There is hardly any increase in the production cost so that the extra USD100 can be considered as pure profit.

Our 250,000 barrels of export should earn us 250,000 x 100 x 365 x 3 = RM27,375,000,000 (twenty seven billion Ringgit).

But Petronas made a profit of well over RM70 billion, all of which belong to the Government.

By all accounts the Government is flushed with money.

Tenaga Nasional Bhd., the state-controlled power producer, will be allowed to raise electricity prices in peninsular Malaysia starting July as it will have to pay higher prices for gas, Abdullah told reporters in Putrajaya, outside Kuala Lumpur.



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