Gov’t considers cutting monthly RON95 subsidy from 300 litres to 200 litres

File photo of a car filling up fuel at a petrol station in Kuching. Photo credit: DayakDaily

By DayakDaily Team

KUCHING, March 26: Malaysia government is reportedly planning to cut the monthly subsidised RON95 petrol quota under the Budi95 programme from 300 litres to 200 litres, as it grapples with surging fuel costs amid escalating global oil prices linked to the ongoing Iran conflict.

In a news report by The Edge, sources said that the reduced quota could be announced as early as this week, with implementation expected from April.

The subsidised price will remain at RM1.99 per litre, but once the new 200-litre limit is exceeded, consumers will have to pay the market-driven floating price.

That unsubsidised rate is set to jump by 60 sen per litre to RM3.87 from Thursday (March 26 to April 1), up from RM3.27. Since March 11, unsubsidised RON95 has risen twice, climbing a cumulative RM1.20 or 44.94 per cent from RM2.67.

Fuel price pressures are also evident across other categories. RON97 is expected to hit RM5.15 per litre, a sharp increase of RM1.90 or 58.46 per cent from RM3.25 on March 11, marking a third consecutive week of hikes.

Diesel prices in Peninsular Malaysia have surged to RM5.52 per litre, up RM2.40 or 76.92 per cent over the same period from RM3.12, although prices in Sabah, Sarawak, and Labuan remain unchanged at RM2.15 per litre.

The move to tighten the RON95 quota is seen as a necessary fiscal step as the Ministry of Finance faces a ballooning subsidy bill, which Prime Minister Datuk Seri Anwar Ibrahim has warned could reach RM24 billion this year if global crude oil prices stay above US$110 per barrel.

Although Brent crude has eased to US$94.49 per barrel from a recent peak of nearly US$120 on March 9, it remains over 33 per cent higher than US$70.84 recorded on Feb 26, before the conflict escalated. The ongoing US–Israel conflict involving Iran has disrupted supply chains and driven global fuel prices higher.

Despite Malaysia being an oil-producing nation, Anwar noted that the country imports more oil than it exports, making it vulnerable to global price swings. He also highlighted the strategic importance of the Strait of Hormuz, through which nearly half of Malaysia’s oil supply passes, warning that any disruption would constrain supply and push prices higher.

To cushion the impact on consumers and businesses, the government has significantly increased fuel subsidies, from about RM700 million to RM3.2 billion within a week, under initiatives such as the Budi Madani RON95 and Budi Diesel programmes, in a bid to prevent a broader rise in the cost of living. — DayakDaily