MP SPEAKS Bernama reported last week the Second Finance Minister Johari Abdul Ghani saying the government is studying the option of setting a ceiling price for petrol in view of the escalating cost of fuel.

He added that, "It is up to the government to set a ceiling which is deemed fair for all. When the government has decided on the ceiling price, whether they (oil & gas industry players) want to sell the oil at lower prices for promotional purposes, we leave it to them.”

We fully welcome the above move as it is long overdue. Malaysians do not understand why petrol companies in Malaysia are not allowed to sell petrol prices at lower prices when they could see how kiosks in Thailand or Singapore can compete and lower pump prices.

When I asked the above question in Parliament several times, the only response I had once in 2009 from the then-deputy Domestic Trade and Industry minister Tan Lian Hoe was that allowing petrol stations to compete with different prices “would confuse consumers”.

It appears that Malaysians consumers are much more easily confused compared to our overseas counterparts.

We can understand if the government sets a maximum price these companies can sell petrol so that Malaysians will not be unfairly over-charged.

But we don't see the logic of not allowing the companies to compete and transfer their cost efficiencies to us via lower fuel prices. This is especially since the government has already abolished fuel subsidy more than a year ago.

Protecting the weak?

The only reason we could think of was that the government is merely trying to protect the weaker players at the expense of the consumers.

As publicly discussed over the past weeks over the fuel price hikes, the petrol price is calculated based on the average monthly price of refined fuel as measured by Means of Platt Singapore (MOPS).

However, petrol companies don't purchase their fuel at these “average” prices. They will all try, with varying degrees of success to acquire their supply of petrol at the lowest possible price during the month or even the year.

In addition, some petrol companies are obviously more efficient than others and have lower operating and investment costs.

Therefore, why shouldn't these companies who purchase their stock at cheaper prices and are more cost-efficient be allowed to pass on some of their savings to long suffering Malaysians?

Hence we urge Johari Abdul Ghani to free up the competition as soon as possible and not wait until petrol prices go up further in the coming months.

In fact, under the new regime, the competition between petrol companies and kiosks must be regulated under the Competition Act by the Competition Commission of Malaysia. This is to ensure that there will be a level playing field and the petrol companies and kiosks will not collude to fix prices at the expense of ordinary consumers.

TONY PUA is Petaling Jaya Utara MP.

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