They question how it could benefit the lower- and middle-income groups. In fact, they argue higher-end car users would benefit the most.

One pointed out an obvious flaw: there was no law stating that owners of luxury cars cannot pump Octane 95, the heavily subsidised fuel.

Under the plan, the existing grades of petrol at the pump are to be replaced by Octane 95, which will be heavily subsidised, and Octane 99, which will be targeted at luxury car owners.

Malaysian Energy Centre consultant Ahmad Hadri said that most cars, including luxury ones, could run on Octane 95.
"The difference lies in the sulphur content. The only impact is in terms of speed and pick-up," Ahmad said.

Instead, he suggested giving exemptions for hybrid cars which are environment-friendly.

"Hybrids run on petrol and electricity. The mileage is nearly double or triple that of a normal car."

An economist said although the new scheme presented an option to consumers, the bulk of society would choose to use Octane 95 if the price gap was too much.

"Until in-depth research is conducted on how big the substitution is, it's difficult to forecast the effects on the economy and how sustainable this system is.

"If most people, including the rich, choose Octane 95, then the burden remains with the government."

Global Environment Centre director Faizal Parish pointed out the environmental impact of heavy usage of Octane 95.

"If most of us use Octane 95, then the sulphur emission would be high. Sulphur causes acid rain and pollution."

Faizal added that the problem was "subsidies encouraged wasteful utilisation".

Secretary-general and chief executive officer of the Federation of Malaysian Consumers Associations, Muhammad Sha'ani Abdullah, said to maintain or realign the petrol price was not a long-term measure.

He said the government must adopt a holistic review and improve public transportation first.

"It's a small item (petrol subsidy) in the whole economy. How does it benefit the lower-income group?"

Sha'ani said although the subsidies would be high for Octane 95 and low for Octane 99, prices of other goods would increase as eventually "they will pass the cost to consumers".

Meanwhile, acting president of the Petroleum Dealers Association of Malaysia, Abdul Wahid Bidin, said the plan was the best approach as subsidies would be enjoyed by everyone equally.

Malaysian Rating Corporation Bhd chief economist Zahidi Alias said the plan was one way for the government to tackle the distribution of subsidies.

"The proposal would be an improvement on the current system. The rich will not mind the higher price as they want quality over quantity."