M'SIA CANNOT CUT FUEL PRICES CONTINUOUSLY, SAYS DPM NAJIB By Mikhail Raj Abdullah

LIMA (Peru), Nov 22 (Bernama) -- The Malaysian government cannot reduce the retail price of petrol and diesel continuously when global crude oil prices decline as they are volatile and can increase again within a short period.

Lowering prices too fast and too low could also have an adverse
impact on
efforts to develop alternative sources of energy, Deputy Prime Minister
Mohd
Najib Razak said here on Friday.

The current low price of oil "is not sustainable, it's going to
go up
(and)
when the price goes up, there will be a need to do a review," said
Najib, who is
in this Peruvian capital to attend the Asia-Pacific Economic Cooperation
(Apec)
summit beginning Saturday.

He was responding to questions on the impact of the low global crude
oil
prices on fuel prices in Malaysia, on Petronas and on the economy at a
press
conference with the Malaysian media at the Miraflores hotel here.

Najib spoke to media after performing the Friday prayers at the
Peruvian
Islamic Centre. He also gave a contribution of US$5,000 to the centre.

He said that most petrol pump operators found it difficult to cope
with
prices that are fluctuating on a daily basis or even on a weekly basis
and they
wanted a degree of certainty as far as the petrol price was concerned.

"A review once every two weeks is something they can accept," he said.

He added that the global oil price would not stay at US$50 per barrel
indefinitely and would eventually increase.

"Furthermore, the price of goods has not declined in tandem with the
fuel
price reduction," he said.

The government has reduced the retail price of petrol and diesel
five times
over the past few months, the latest was on Monday as crude oil prices fell
significantly due to the global economic crisis.

However, just last July, crude oil prices touched a record high of
US$147
per barrel.

The spiralling prices prompted the government to raise petrol and
diesel
prices in June.


"Whether we should bring it all the way down and whether within a short
period of time we have to review it upward, all these factors have to be
taken
into account," he said.

Moreover, Najib said, "we do not know what is the price of oil going
to be
in the coming months; these things have to be studied further."

Najib said it was therefore important that the fuel price reduction
should
take into account whether it was proper to implement a full reduction as "I
don't think the crude oil price will stay as it is."

When asked whether this would mean that the government would no
longer be
revising downward the retail price of fuel, he said, "I don't say that
there
won't be a reduction but we should look at whether a reduction is proper."

In terms of the country's economy, he said, the effect on inflation
would
be
positive as "we will have the opportunity to lower the fuel price."


"If we reduce the price too fast, does this mean that when the
(global fuel)
price increase, we will have to increase the price?" he said, adding
that if the
price was too low, there would be less incentive to develop alternative
sources
of energy.

"However, the government is aware that it is our responsibility to
review
the fuel price based on the global price and we will definitely discuss
this in
the next Economic Council meeting," he said.

He said a lower fuel price would mean less revenue for the country
and the
national petroleum company, Petronas, but with fuel subsidy also dropping
accordingly, there would still be a balance between the two.

The deputy prime minister said subsidy savings "will be significant"
with
crude oil prices having fallen to US$50 per barrel, but the figures
would have
to be worked out.

As for the cash rebate paid out to motorists who renewed their road
taxes
since March this year, he said, it would be reviewed next year as "we
have to
wait for one circle of rebates paid out to finish by March 2009