KINIBIZ Under the new managed float system for RON95 petrol, pump prices would be determined by a 10-day average of fuel prices in international traded markets, plus fixed profit margins for refineries and retailers.

Pump prices will be reviewed on a monthly basis and there will no longer be a subsidy component under the new system.

The new fuel pricing mechanism was announced yesterday by the Domestic Trade, Cooperatives and Consumerism Minister Hasan Malek and is effective Dec 1.

The final pump price will be based on the Mean of Platts Singapore benchmark.

Hasan said if there is a significant change in prices in the first 19 days of each given month, then the average of the last 10 or 11 days of the month will be taken to calculate the final retail price.

Included in the final retail price on top of the Mean of Platts 10-day average is a fixed operational cost recovery factor, a fixed margin for oil companies and a fixed profit margin per unit for petrol dealers, a Pemandu director, Ku Kok Peng, explained.

Currently, RON95 petrol retails at RM2.30 a litre, while diesel is priced at RM2.20 a litre.

The decision to move to a managed float was made after the true price of RON95 petrol fell to under the government-determined retail price.

This development comes at no surprise as crude oil prices in global markets have fallen by 30 percent in recent months. Brent crude has been trading this week at under USD80 per barrel.

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