A former adviser to Najib Razak has questioned Rafizi Ramli’s arguments for abolishing blanket diesel subsidies, saying a closer look shows the economy minister’s claims are inconclusive and, in some cases, defy logic.
Isham Jalil, a former UMNO information chief who was fired by the party last year, also said it was not true that crude oil prices were at record lows in 2008, around the time Rafizi and PKR launched a campaign to reduce prices of the fuel in response to the then Barisan Nasional government’s plans to abolish fuel subsidies.
Isham, who was in charge of the fuel rationalization plan in Najib’s Economic Planning Unit, said crude oil prices were among the highest this year.
“This means that the government’s liability for subsidies in 2008 was higher, unlike today,” Isham said in a podcast show with TV Pertiwi, shorter excerpts of which went viral online as Malaysians criticized the government’s arguments for eliminating diesel subsidies.
Isham commented on Rafizi’s response to someone who confronted the PKR leader during a recent speech in Penang.
A member of the public asked Rafizi why the Pakatan Harapan government had not fulfilled its election promise to reduce fuel prices.
A visibly angry Rafizi said that in the past the government had to spend very little on fuel subsidies, RM3 billion out of a budget of RM200 billion, so that the price of petrol could drop to RM1.90. per litre.
Rafizi said his previous campaign in the opposition bloc to maintain fuel subsidies was motivated by the fact that the government could still afford them at the time. On the other hand, he added, these measures now cost the current government RM80 billion a year.
However, Isham said the current crude oil price of $125 per barrel is higher than $80 in 2008.
On June 10, diesel prices in Peninsular Malaysia soared to RM3.35 per litre after months of speculation over the removal of subsidies.
Prime Minister Anwar Ibrahim has repeatedly said that subsidies hurt the economy and do not benefit Malaysia. He also claimed that there were leakages in the form of subsidies to neighbouring countries through smuggling and that subsidised prices were used by foreigners who did not pay taxes.
The figures don’t add up
Isham said the allegations about smuggling and foreigners were not true.
He cited Putrajaya’s claim that up to RM8 billion, or about half of annual diesel subsidies, was lost due to smuggling activities by land or sea.
He said this would mean 600 million litres of diesel would be smuggled every month.
“600 million litres divided by 30 days equals 20 million litres of diesel smuggled across borders every day.
“If that’s true, there would have to be 40,000 tankers lining up to cross the border every day, each carrying 500 litres of diesel,” Isham said.
He added that even with double the capacity, 20,000 tankers would still be needed. Isham said each tanker could carry 20,000 litres.
“That means a thousand tankers are queuing to cross the border every day! That means one tanker is released every minute. Does that make sense?
“Where did he (Rafizi) get these numbers?” asked Isham, adding that this would mean that the police, customs and immigration were turning a blind eye.
‘Rafizi, do you know what you’re talking about?’
Isham also criticised Rafizi for his claim that diesel smuggling was taking place at sea. He said the minister had targeted fishermen, accusing them of illegally selling subsidised diesel to foreign vessels.
“Rafizi, do you know what you are talking about?” he asked again, referring to the minister’s claim that fishing boats were being used to smuggle the fuel.
“For half of the smuggled diesel, or 10 million litres, how many thousands of fishing boats are needed to go out to sea? Rafizi, are you saying that APMM and the navy don’t see this?” Isham added, referring to the Malaysian Maritime Enforcement Agency.
He said Rafizi must have realised that his figures were meaningless and then claimed that smuggling and leaks were taking place in the country by people buying subsidised diesel at the pumps and reselling it to the industry.
Based on the government’s claim that between RM7 billion and RM8 billion was lost due to subsidies, he said this means that 70 to 80 per cent of the diesel was purchased by consumers who sold it illegally to the industry.
“So of the 4,000 or so petrol stations nationwide, seven out of 10 are involved in theft!”
He added that even then, the action could not be termed “smuggling” as it happened within the country.
“Smuggling is a cross-border activity.”
Isham also criticized Rafizi’s argument that subsidised diesel was being sold illegally to the industry.
He said the industry was using a cheaper variant of diesel.
“But the point is this: one can tell the difference between industrial and automotive diesel. In some cases, Petronas or the government has dyed the colour so that they know that someone is selling a certain type (of diesel) and whether it comes from the pump or is a different colour.”
“It’s not easy for people to steal like that,” Isham said, adding that Rafizi had probably made up the claim about illegal diesel sales because his figures on smuggling didn’t make sense.”
In another video circulating, Isham disputes Anwar’s claim that diesel subsidies benefit foreigners and the rich.
“My question is, who are these foreigners who use diesel cars and motorbikes? Most foreigners don’t even have a driving licence. They don’t drive cars or motorbikes, and even if they do, they do it illegally.
“The point is that there aren’t many of them. As for the rich, how many of them drive luxury cars with diesel engines? Most luxury cars like Porsche, BMW and Mercedes run on petrol, not diesel.”
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