Sabah, Sarawak fuel price gap may disappear if global tensions escalate, warns state agency leader

KOTA KINABALU, April 13 — Fuel prices across the country could eventually be standardised if global tensions continue to disrupt energy markets, a Sabah leader warned today, raising the possibility of changes to Malaysia’s long-standing regional fuel pricing structure.

The Star reported Sabah Economic Development Corporation (Sedco) chairman Datuk Masiung Banah saying that ongoing geopolitical uncertainty and volatility in global oil markets could put pressure on Malaysia’s current subsidy system.

“If the global economic crisis lasts and the war between Iran and America/Israel becomes more tense, then it is not surprising that petroleum prices in Sabah, Sarawak and the peninsula will be standardised,” Masiung was quoted as telling reporters at Kampung Kuala Keramuak in Tongod yesterday.

At present, Malaysia operates a targeted fuel subsidy system that keeps retail prices stable for consumers despite global fluctuations.

RON95 petrol is currently subsidised at RM1.99 per litre for both peninsular Malaysia and East Malaysia.

Without subsidies, RON95 prices would be significantly higher and are estimated to exceed RM4 per litre based on weekly market indicators.

Diesel pricing differs more clearly by region and sector. 

In the peninsula, diesel is floated weekly and has been above RM6 per litre in recent cycles, while subsidised diesel at about RM2.15 per litre is available only for selected sectors such as logistics, public transport and agriculture.

In Sabah, Sarawak and Labuan, diesel is fixed at RM2.15 per litre under a separate arrangement.

Masiung said rising global oil prices would inevitably push up the cost of daily necessities, especially imported goods, due to higher transport and logistics costs.

“The increase in world oil prices will certainly lead to an increase in the price of daily necessities, especially imported goods,” the Kuamut assemblyman was quoted as saying

He added that Malaysia’s fuel subsidy system is coming under increasing fiscal pressure, making long-term blanket support more difficult to sustain.

Masiung also warned that subsidy structures in Sabah and Sarawak could be reviewed if government financial constraints intensify.

“We must be prepared for the increase in the cost of living due to the uncertainty of the global economy, because that situation cannot be avoided,” he was quoted as saying.

He urged households to adopt more frugal spending habits.

He said current estimates place Malaysia’s fuel subsidy burden at around RM6 billion a month, reflecting the scale of government spending needed to maintain stable retail prices.

While the current system continues to shield consumers from global price volatility, he suggested that prolonged instability in energy markets could eventually push Malaysia towards a more uniform fuel pricing structure across regions.