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Sunday, November 23, 2008, 12.14 AM

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Reason for small drop in pump prices

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"People must understand that for every litre of petrol there is already a 30-sen subsidy," Deputy Prime Minister Datuk Seri Najib Razak said yesterday after visiting the Education & Career Malaysia 2008 Fair here.

"The recent reduction of between eight and 22 sen per litre is actually an additional reduction in fuel prices. The people should realise this."

Effective yesterday, the retail price for RON97 petrol was reduced by 15 sen from RM2.70 per litre to RM2.55, while RON92 was reduced by 22 sen to RM2.40 from RM2.62.

The diesel price has gone down by eight sen, from RM2.58 to RM2.50 per litre.

Najib said the reduction was also in addition to the rebate of RM625 for vehicles with an engine capacity of 2000cc and below.

"Many people tend to forget about the rebate.

"If we translate the rebate to one litre of petrol, it is about 35 sen to 40 sen per litre."

Najib said if the people were not appreciative of the fuel rebate, then the government would withdraw it.

"If the people are going to continue moaning about it, we might as well to do away with the rebate and transfer it (rebate) to the pump price.

"But it would not be fair to people from the lower income group.

"If we transfer it (the rebate) to the pump price, then big and expensive cars such as Bentley, Jaguar and the BMW Seven Series would also benefit from the susbsidy. Would this be fair?"

Najib said local fuel prices increased only when the world crude oil price hit US$120 (RM400) per barrel.

"When it increased further to US$143 per barrel, there was no increase."

Najib said this was unlike Singapore, which had increased its fuel prices 11 times last year.

He said a further drop in pump prices would be dependent on the world crude oil price.