Published on June 25th, 2024 | by Sounder Rajen

Diesel Sales Drop By 30 Percent After Subsidies Removed Says Finance Minister

Clearly diesel subsidies have been abused by many Malaysians for decades

Total diesel retail sales at petrol stations plummeted by nearly eight million litres per day, marking a steep 30 percent decline during the first week (10 to 17 June 2024) following the announcement of revised diesel subsidy measures, as reported by Finance Minister II Datuk Seri Amir Hamzah Azizan. This is definitive proof that many Malaysians have been abusing the subsidies for many years now, at least, that is how it seems.

Despite this, commercial diesel sales surged by four million litres daily over the same period, indicating a shift away from subsidised diesel usage by industries mandated to purchase at market rates. “This shift underscores a positive trend, suggesting a reduction in the misuse of subsidised diesel.” said Amir Hamzah at his parliamentary address on the subsidy adjustment.

Moreover, he highlighted reports from oil companies revealing a stark 40 percent decrease in diesel sales at border points, affirming prior concerns about cross-border smuggling. Amir Hamzah also emphasised collaborative efforts among enforcement agencies to combat smuggling activities and uphold supply stability while thwarting profiteering.

Operations under OPS TIRIS 1.0 and 2.0 last year resulted in the seizure of 6.44 million litres of diesel valued at RM14.2 million, along with assets worth RM42.1 million. These actions led to the arrest of 667 suspects linked to subsidy abuse.

On top of that, continuing under OPS TIRIS 3.0 from 1 January 2024, until 22 June 2024, there have been a further 570 cases, seizing over 5.1 million litres of diesel valued at nearly RM12 million, and assets worth RM46 million, with 275 arrests made.

Following the subsidy rationalisation initiative launched in early June, the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) activated OPS KESAN 2.0 to monitor impacts and prevent profiteering under the Price Control and Anti-Profiteering Act 2011. By 20 June 2024, 2,100 premises had been inspected nationwide, resulting in 210 notices issued and seven identified profiteering cases.

Amir Hamzah projected potential annual savings of RM4 billion through these measures, while noting ongoing subsidies amounting to RM10 billion, covering various sectors including public transport, logistics, and fisheries. If anything this is at least a good first step in the right direction but it is alarming to see just how much was being wasted on these subsidies for so long.