Domestic trade ministry's LPG cylinder operation explained

Free Malaysia Today

2 days ago

From Armizan Mohd Ali
Op Gasak is being carried out from May 1 to Oct 31 with the main focus on combating illegal decanting, smuggling and use of liquefied petroleum gas (LPG) cylinders by large- and medium-sized industries.
The legal authority for Op Gasak is derived from the Control of Supplies Act 1961, Price Control and Anti-Profiteering Act 2011, and the Control of Supplies Regulations (Amendment) 2021 or PPKB (Amendment) 2021.
No new policies or regulations are being introduced, and there are certainly no cuts or abolition of LPG subsidies, as alleged by certain parties.
Certain issues have arisen with the implementation and enforcement of PPKB (Amendment) 2021 involving certain business sectors, specifically the food and beverage (F&B) industry.
For that reason, inspections at F&B premises under Op Gasak are currently focussed on compliance checks and advocacy. No legal action is being taken against these F&B businesses.
Once the operation concludes, a report on Op Gasak will serve as one of the key references for reviewing the relevance of the PPKB (Amendment) 2021, in relation to LPG cylinders.
Since Op Gasak commenced on May 1, a technical committee chaired by the domestic trade and cost of living ministry secretary-general was formed to look into the matter.
In addition to the Op Gasak report, recommendations and views from various stakeholders will be considered before any proposals are brought to the Cabinet.
Under the previous government, amendments were made in 2021 to the Control of Supplies Regulations. One of the amended provisions fixed a limit on the use of LPG cylinders for trade or business purposes.
Specifically, the PPKB (Amendment) 2021 states that any business using over 42kg of LPG at any one time requires an application for a scheduled controlled goods permit.
This means that any party using more than 42kg (that is more than three of the 14kg cylinders, normally used by domestic users) must apply for a permit and cannot use subsidised LPG cylinders.
This amendment has been in force since Oct 15, 2021.
There are views that the 2021 regulations have impacted business costs for F&B traders, which in turn could affect their prices if they are not allowed to use subsidised cylinders.
The underlying basis of the LPG subsidy is that it is a household consumption subsidy, not one intended for trade or commercial use.
However, current regulations allow the use of up to 42kg at any one time without requiring a permit.
F&B traders have expressed the need to use more than three subsidised LPG cylinders at once.
If this need of theirs is to be considered, amendments to the 2021 regulations — specifically to the 42kg limit — will become necessary.
We must also take into account other factors, such as the limit on subsidised cylinders per business and the type and scale of the business (micro, small, medium or large).
Moreover, if food prices and cost of living are cited as justifications, the prices charged by these businesses should also be examined.
For example, one trader sells chicken rice at RM8 per plate, while another sells it for over RM20. This is a big price difference despite both of them benefitting from the same LPG subsidy.
A very important factor to consider is the financial implication on government allocations, which are public funds.
For instance, the estimated subsidy for a business using five LPG cylinders a day is RM6,510 per month, based on RM43.40 in subsidy per cylinder. For a business using 10 cylinders daily, the monthly subsidy totals RM13,020 (300 cylinders/month).
At the same time, monitoring mechanisms such as the requirement for scheduled goods permits are crucial.
Based on the ministry's enforcement, there is a risk of decanting from subsidised supplies to businesses when there is no record-keeping or sale limits in place for verification.
Decanting refers to the illegal transfer of LPG from subsidised cylinders to non-subsidised ones for commercial resale below market price, including for smuggling abroad.
All these considerations, together with the recommendations and views of various parties, will be taken into account to determine whether the PPKB (Amendment) 2021 should be revised.
If amendments are deemed necessary, the parameters and scope of the amendments must be carefully determined.
Therefore, the Op Gasak report is a key reference point in charting the way forward for improving the 2021 regulations.
Armizan Mohd Ali is the domestic trade and cost of living minister.
The views expressed are those of the writer and do not necessarily reflect those of FMT.