2008 subsidy for fuel & gas to be RM45 billion

KUALA LUMPUR, May 7 (Bernama) -Taxpayers may have to bear a whopping RM45 billion in subsidies for fuel and gas this year, Second Finance Minister Tan Sri Nor Mohamed Yakcop, said here Wednesday.He said the subsidies are based on global crude oil prices hovering between US$100-US$120 per barrel.Of this, RM18 billion is for petrol, diesel and liquefied petroleum gas, RM7 billion in tax relief and RM20 billion is for the Petronas gas subsidy, he told a media conference.The subsidy looks set to increase if the price of oil increases further."It is RM45 billion and rising. If the crude oil price spikes to US$130 per barrel tomorrow then the subsidy will be higher," he said after launching RHB Banking Group's new logo.Tuesday, oil price shot up to a fresh record of US$122 per barrel on global markets on supply worries and a weak dollar.Nor Mohamed said there was no cap for the subsidy amount.However, he said the government was looking at ways to restucture the whole subsidy scheme to make sure that it was sharp and focuses on the right priority sector."We are mindful of the need for the subsidy scheme to be sharp. Any aspect of the present subsidy scheme, if it is blunt, then we've got to sharpen it."Asked on the effect of the restructuring, he: "If we restructure and refocus on the subsidy, the net effect may not be much for the government. It is just that the subsidies will be more efficiently and effectively done. We have to minimise the leakage. So, the cost may not be necessarily higher."Nor Mohamed did not give a timeframe or deadline for the restructuring.Earlier, in his speech, he said "continuous reassessments are required to enable us to build upon our strengths and comparative advantages as well as seek new opportunities, both locally and abroad."More importantly, there is need to be equipped to respond to these new opportunities as well as challenges."It is my hope that the RHB Bank will continously transform and reinvent itself as what is relevant today may not necessarily serve us well in the years ahead," he said.He also said that the banking sector plays a crucial role in attracting foreign direct investors as well as in the country's socio-economic stability.