KUALA LUMPUR (July 18): The Ministry of Finance (MOF) is conducting a study to develop an initiative for the implementation of the variation of price (VOP) clause for items or construction materials in government contracts, which are purportedly impacted by increases in costs due to targeted diesel subsidies in Peninsular Malaysia.  

The ministry stated that the government is aware of complaints and concerns from contractors and the construction industry regarding this issue.

It said that the use of diesel in the construction industry before the implementation of the Subsidised Diesel Control System (SKDS) was at commercial prices without subsidies.

With the implementation of the SKDS following the prime minister’s announcement on May 21, which agreed on targeted diesel subsidies in the peninsular effective from June 10, the targeted subsidies involve 10 types of public transportation diesel vehicles and 23 types of land goods transportation diesel vehicles under the SKDS.

“There is no proposal to increase the number of vehicles provided with subsidised diesel,” said the MOF in a written response published on the Parliament website on Thursday.

The ministry was responding to Wong Shu Qi (Pakatan Harapan-Kluang) regarding the provision of diesel subsidies to G1, G2, and G3 contractors involved in, among others, earthworks and electrical works. 

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