Impact and analysis of hike petrol price

KUALA LUMPUR: Prime Minister Datuk Seri Abdullah Ahmad Badawi announced a restructred fuel subsidy scheme today. The measures included:

Effective midnight, fuel petrol price has been raised to RM2.70 per litre; diesel up by RM1 per litre to RM2.58; ULG 92 up 74 sen; ULG 97 up 78 sen.

Cars up to 2L, pick-ups up to 2.5L to get RM625 annual cash rebate; motorcycles up to 250cc get RM120; rebates via postal order from July 1, 2008.

Power sector gas raised to RM14.31 from RM6.40 per mmbtu; IPPs pay 30% windfall tax on PBIT; Tenaga can raise tariffs by next month; households using less than RM40 of power will not be affected.

Industries using less than 2mmscfd of gas to pay up to RM24.54 per mmbtu versus RM9.40 now; industries using more than 2mmscfd to pay RM32.56 per mmbtu from RM11.32 now.
Cars above 2L get road tax discount of RM200; motorcycles more than 250cc, road tax discount of RM50.

CPO cess removed; for oil millers, windfall tax at 15% at threshold of RM2,000 per tonne; Sabah and Sarawak millers to pay 7.5%.

The impact:

Annual inflation expected to be at 4%-5%
Rebates for motorists expected at RM5 billion
Govt to maintain GDP growth at low end of forecast of 5%
Fuel subsidy this year expected at RM18 billion versus RM57 billion if not for restructuring
Govt expects to save RM13.7 billion from fuel subsidy; savings to go towards food security, cooking oil, rice, bread, flour, among other things.