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ENERGY
Time for a switch? We can save RM12 billion per year if we use more diesel vehicles
by Koon Yew Yin
Mustapa claimed that Malaysia produced 700,000 barrels of crude oil a day, versus a domestic daily consumption of 520,000 barrels a day and, if this trend was not reversed, Malaysia would be a net importer in four years� time. This statement should wake up all the law makers in the government to seriously consider how to include some new regulations in the new National Automobile Policy to encourage the use of diesel vehicles, like what is being done in Europe. In Aliran Monthly Vol 25 Issue 4, I wrote a piece titled �How to solve the diesel shortage� and save the nation billions of ringgit�. In view of Mustapa�s article and the rapid rise of oil price of more than 50 per cent from below US$40 to above US$60 per barrel in the last few months, the savings would be even larger if more diesel instead of petrol vehicles were used. As a strong crusader of diesel usage, I wish to publicise my belief more forcefully. If you had read this article carefully, you would be as anxious as I am, if not more. Why Europeans are using more diesel vehicles We can save more than RM10 billion per year if we just follow the European practice. The idea is based on increasing the number of diesel passenger cars used in Malaysia. In Europe, about half of vehicles currently sold are diesels, and in Austria it is over 71 per cent. The share going to diesel cars is projected to soar to the point where the vast majority of new cars sold in Europe will be diesel powered. There are several reasons for this. Diesel cars have much better fuel economy, and they have cleaner engines, which produces less harmful gase. Recent advances in diesel technology have significantly improved the drivability and performance of modern diesel vehicles. And diesel engines are far more durable and cheaper to maintain. Diesel fuel itself is safer than petrol, has higher energy content, and packs more power per unit volume. This is why so many European consumers choose diesel engines over petrol. We Malaysians should realise the potential in the modern diesel engine and act now to take advantage of its benefits. Unfortunately, our present road tax structure in Malaysia is set at a level which penalises owning a diesel car (although import duties for diesel-powered cars are lower). This imbalance needs to be looked into. For example, in Europe, road taxes for diesel and passenger cars vary only slightly and a structure similar to this would place less of a barrier towards Malaysians buying diesel cars. Illogical increase in diesel prices In May 2005, the Government increased diesel price arbitrarily to solve the shortage at petrol stations because diesel was smuggled to be sold to industries at a higher price. And then on 31 July 2005, the Government again increased prices by 20 sen per litre for diesel and 10 sen per litre for petrol. In the last few years, the price of diesel has gone up almost 100 per cent while the road tax for diesel cars remains unchanged at 200 per cent of petrol vehicles. The diesel price has gone up much faster than petrol as if the government purposely wants to penalise diesel vehicle users. How to save RM12 billion Following the European practice, vehicles using diesel will use about 35 per cent less fuel and assuming the following:
In addition, our Government will be able to save about 35 per cent less on the total subsidy of RM16.8 billion - which will amount to RM5.9 billion. The total savings will be about RM12 billion per year based on the current oil price. Just as for everything else, the price of oil will definitely rise further in the long term and the savings will be even more. Moreover, we can export the 35 per cent of the oil we saved and use the extra foreign exchange earnings to further develop our economy. According to the Cabinet meeting on 10 August 2005, the Prime Minister and a new committee will review the issuance of Aps and the draft of the New Automobile Policy prepared by International Trade Minister Rafidah Aziz. I hope the new committee will read this article and formulate policy bearing in mind that national interest must come first. All the local car manufacturers including Proton do not make complete car engines. During my visit to the Perodua assembly plant recently, I was told that they are the only manufacturer in the country making part of the car engine, that is, the cylinder heads. So, in fact, all car assemblers will not be affected if they have to import diesel engines instead of petrol engines. The new National Automotive Policy must include changes in regulations on road tax, car import duties and APs to encourage the use of diesel vehicles. For a quick start, APs should only be issued only for the import of diesel vehicles. I hope more people will read this article and help me to urge the government to do the right thing. Please support our work by buying a copy of our print publication, Aliran Monthly, from your nearest news-stand. Better still take out a subscription now. If you prefer to read our web-based edition, please support our work and make a donation.
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Mustapa claimed that Malaysia produced 700,000 barrels of crude oil a day, versus a domestic daily consumption of 520,000 barrels a day and, if this trend was not reversed, Malaysia would be a net importer in four years� time.
