Constraints in Sabah, Sarawak keep diesel prices unchanged
Conditions in Borneo made it difficult to implement the same monitoring system as in the peninsula, although the government continues to regulate fuel purchases and sales in Sabah and Sarawak.
SHAH ALAM — The increase in retail diesel prices in Peninsular Malaysia has been aligned with global market rates following the implementation of a monitoring system that enables subsidies to be targeted at eligible groups.
However, economist Dr Nungsari Ahmad Radhi said the approach differed in Sabah and Sarawak, where fuel transactions still occur outside petrol stations, including informal retail sales.
He said conditions in Borneo made it difficult to implement the same monitoring system as in the peninsula, although the government continues to regulate fuel purchases and sales in Sabah and Sarawak.
“Take the system in the peninsula as an example. For bus companies purchasing fuel at bus stations, we can identify how many litres are used. That is why the government adjusts diesel prices according to global market rates, as usage can be tracked in detail.
“At the same time, countries are facing a shortage of crude oil to be refined into diesel. That is why we are seeing diesel shortages across Asia.
“However, we still have supply despite higher prices. Some countries are facing severe shortages such as Thailand, Indonesia, Vietnam and the Philippines,” he told Sinar.
Nungsari said diesel is a product derived from crude oil refining, which has risen by nearly 50 per cent since the war began.
“As a result, the overall cost of crude oil upon reaching refineries is much higher and diesel prices as a refined product have surged sharply,” he said.
Meanwhile, economist Dr Mohd Faisol Ibrahim said higher diesel prices in Peninsular Malaysia were due to differences in population distribution and infrastructure compared to Sabah and Sarawak.
He said this would influence and impact logistics and supply chains in the market.
“That is why prices in Sabah and Sarawak are lower compared to the peninsula.
“In addition, diesel prices in the peninsula are higher because its usage is not widespread among the public but is mainly for business purposes,” he said.
Faisol added that the increase in diesel prices was also due to Malaysia being a trading nation affected by the rise in global crude oil prices.
He said lower domestic diesel prices compared to global market rates could encourage misuse.
“If this happens, it will result in greater losses and place an even heavier burden on the country, which already has to spend significantly to cope with rising global oil prices while ensuring economic stability and public well-being,” he said.
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