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15 January 2010

Fuel Price By Car Size & ePetrol

On 8th January 2010, the Straits Times (Singapore) reported that the Government is launching a pricing mechanism for petrol stations to ensure that only those from eligible groups would be able to purchase petrol at subsidised rates. This mechanism will be launched on 1st May 2010. Those not identified as lower-income groups, and foreigners, will have to purchase petrol at full rates. For example, Domestic Trade, Cooperatives and Consumerism Minister Ismail Sabri Yaakob said that foreigners and persons from higher income groups will be charged RM2.10 a liter of RON 95 petrol. (Ref: The Straits Times, 8th Jan. 2010. Fuel Price By Car Size.)

The report from the Straits Times appears to summarize an article in The Star (Malaysia). (Ref: The Star, 8th Jan. 2010. Fuel Price By Car Size.) The Star reported on 8th January 2010 that:
  1. The unsubsidized rate of RON 95 is RM2.10 per liter.
  2. The present rate of RON 95 is RM1.80 per liter, representing a subsidy of RM0.30 per liter.
  3. Datuk Seri Ismail Yaakob promised, "The bigger the engine, the higher petrol will cost."
  4. The government is planning to make the MyKad a compulsory part of purchasing petrol.

The government should consider the following categories of people, each of which pose different problems.
  1. Those with more than one car: Will they be automatically classified as "higher income"? Which car's engine will their classification be based on?
  2. Those with bigger, older cars: Obviously, a 20 year old Mercedes with a sputtering engine will cost less than a brand new Mini.
  3. Those with several small cars: Obviously, they stand to enjoy the subsidy if they are classified as "lower income" based on the car size alone.
  4. Those who buy using credit card: Will they be classified as "higher income" simply because of the credit card?

FOMCA secretary-general Muhammad Shaani Abdullah suggested that the government can do away with subsidies gradually. He suggested that all people can purchase up to 200 litres of subsidised petrol, after which the petrol so purchased will be unsubsidised. Further, he called on the government to cushion the effects of any price increase in petrol by limiting the increase to only a few sen per litre. Barisan Nasional youth chief Khairy Jamaluddin attempted to boost his lagging popularity by suggesting that petrol subsidies should be made available to motorcyclists and people who drive Proton Sagas and Perodua Kancils. (Ref: The Star, 8th January 2010. Wean us off subsidies, says Fomca.)

In the UK, the HM Revenue & Customs has published advisory rates for companies which subsidise employees for travel using company cars (for work purposes), and/or companies which require employees to reimburse the company for using company cars (for private purposes). The latest rates are applicable from 1st December 2009. (Ref: HM Revenue & Customs, Company cars - advisory fuel rates from 1 December 2009.) A further explanation about fuel rates can be found here.

MyKAD and ePetrol

On the topic of MyKad, in 2008, ePetrol Holdings Sdn Bhd, a local Malaysian company, had hit upon the idea of using the MyKad to regulate the amount of subsidy received by petrol purchasers at the petrol pump. (Ref: The Star, 26th May 2008. How ePetrol System Works.) ePetrol is capitalizing on the fact that the MyKad already has biometric features, and can be PIN-enabled for secure transactions. Some of the features of the ePetrol solution include:
  • Linking the MyKad to a user's bank account to enable payments to be directly debited from the account;
  • Keeping record of how much petrol subsidy a user is entitled to, and the balance available for the month;
  • Possibility of de-linking the user's MyKad from ePetrol system in case of theft or loss of card.

ePetrol is a payment system, devised by ePetrol Holdings Sdn Bhd. (Ref: Dialog Group Berhad, ePayment Technology & Solutions.) Its main idea is a cashless mode of payment, made possible by the MyKad which every Malaysian has. In fact, ePetrol Holdings Sdn Bhd appears to have lofty plans for ePetrol payment system, which include: Fuel and food subsidy; payment; Welfare Distribution; and others. The government too, would stand to gain from the intended implementation of ePetrol:
The benefits of the system include:
  • Automatically identifying consumers entitled to fuel subsidies;
  • Managing the amount of subsidies to be allocated to each consumer;
  • Controlling the frequency of the subsidy to be provided – weekly, monthly and so forth; and
  • ·Managing how the subsidy is provided (in a lump sum or as a percentage of the purchase).

In September 2008, the Star announced that Dialog Group Berhad, which owns ePetrol Holdings Sdn Bhd, had unveiled a payment system for fuel subsidy involving MyKad. (Ref: The Star, 16th September 2008. Buy fuel with your MyKad.)

Although the ePetrol system has not been mentioned in the papers of late, the Government announced in December 2009 that it would save RM2 billion annually by implementing a fuel subsidy scheme involving the MyKad. (Ref: The Star, 2nd Dec. 2009. Government to save RM2 billion via new fuel subsidy system.) ePetrol kiosks were scheduled to be placed at all "BHP, Caltex and three Shell-branded stations owned by Dialog Group Bhd." (Please visit the link to see more diagrams.)



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