Tuesday, November 29, 2022

Subsidy issues - Simple solutions for all.

 Malaysia now is in a new era of government and thus the government must listen to the Rakyat.

Fuel subsidy is a real pain in the backside for a lot of people, and they should learn from from both Indonesia and Singapore on how to run a fuel management system.

My take is as such:

Link with a Fleet Management Operator, such as Petronas, Shell, Petron, BHP or even a 3rd Party Fuel Reseller such as how in Singapore akin to BestFuels etc for DIESEL MANAGEMENT.

How it work? Every card /  RFID Token has preset quota per day / week and month and when it's finished, it's finished and they have to pay FULL TARRIFFS. So as a company, they could pool the subsidy up to their limits, based on their usage.

Example: ABC Bus has 20 Express Buses and each uses 260L and drives 2000km....which is a lot. So the quota will be 250Lx28days=7000L per vehicle and the preset fuel will be billed accordingly, on month-to-month basis. If the company has poor payment record, then the fuel subsidy will go like the Commercial Vehicle Owners, such as Grab etc.

Commercial SME users can use APP BASED discount where they are given discount coupons for their purchases and this is subjective to their 'QUOTA' usage. Of course, like here in SG, we have 'LOYALTY' cards which is nothing new, but these cards can come with preset discounts like 10-20% depending on membership *(standard, commercial, grab-driver)++ 

So fuel prices MUST FLOAT. To ensure dealers are not short changed, the price they pay the company is based on the amount of fuel dispensed, less all the coupons and discount codes. Again, this is to ensure fairness and equality, as some stations lose fuel to ullage is approximately 400L of Petrol a day. As a former station owner, our net dealership discount was only 3.5sen per liter and over a tankful of 52,000L delivered, we must sell that all in a day at least before we lose money due to weather.

We actually make a little bit more money on the shop stuff, like prepaid and e-wallet topup (50c per transaction) and what others.

So, if foreigners want to refuel, they pay as per float and if B40 wants to get super cheap fuel, the subsidy may be higher because they have more coupon or subsidy whereas those with high capacity cars, get lesser coupons.

So if you run out of coupons or if you are not entitled to subsidies, then you pay the full price. Simple as that. You cannot have a BMW driver enjoying same subsidy as those with earning less than RM4000.

The mechanism could be as follows:

Motorbikes, under 150cc                     RM100 or 50L of subsidised fuel at RM1; 50L @RM1.50.
Cars under 1500cc or over 10 years    RM300 or 100L at RM1 ; 100L at RM1.50
Cars 1500-2000cc                                RM200 or 200L at RM1.50
Small Trucks BDM<5T                       RM500 or 500L at RM1 (Same as fisherman)
Large Trucks / Bus                               RM2000 or 2000L at RM1

This will be far lower than the RM2.05 fuel price but they won't bleed too much as logistic cost won't go up. The bare subsidy can be applied directly to the fuel provider as a pool or likewise.

Put to this perspective, a Thai Pickup, refuel 60L x 3 a day = 180L of subsidy lost daily x 20 days...which is about 3800L of fuel subsidies or approx RM2000! 
My Singaporean Brethren are no better with their fuel monkey tricks, despite the RM4 full price of RON97...so at least there is a sense of targeted subsidy for the needy.

In a way, 50L of petrol = 700km for a biker, or 20 tankfuls of a Honda Cub, 1000KM for a small car based at 10km/L consumption, and these will spur the need to budget their commute to public transport.

As for Stage Bus, maybe the LTA-PPP Bus may work well, where the bus, fuel are by the MOT, and operators charge for the Labor and Operations. At least we will know the bus will be on time and maintained.