Monday 04 Nov 2024
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KUALA LUMPUR (Oct 21): The federal government is currently considering the use of a tiered pricing mechanism for RON95 petrol subsidy, similar to the model it used earlier this year for the retargeting of diesel subsidy, according to Ministry of Finance Treasury secretary general Datuk Johan Mahmood Merican.

Under the proposed tiered pricing system, the top 15% of earners (T15) and foreigners will pay the market rate on RON95 petrol, while the remaining 85% of consumers will continue to enjoy subsidised RON95, Johan said on Monday during the 2025 Post-Budget Debate organised by the Malaysian Economic Association.

“This is subject to finalisation, but for example, the government is developing a database of consumers, those within the 85% and those that are not, including businesses, non-Malaysians, and Malaysians above a certain income or wealth,” Johan explained, but did not specify on whether he was referring to the Central Database Hub (Padu) or a completely new database.

“For those within the approved category (the 85%), conceptually, at a petrol station, individuals will be able to continue to purchase subsidised RON95 via a certain mechanism, whether it is through a fuel card, IC (identity card) linked back to the database, or another option to replicate the mechanism we have for diesel, but for individuals,” he added. 

However, Johan noted these details still need to be ironed out, hence the June 2025 implementation deadline announced during Prime Minister Datuk Seri Anwar Ibrahim’s Budget 2025 speech. 

Echoing Anwar, Johan said those from the T15 group and foreigners utilise about 40% of the RON95 subsidy, valued at RM8 billion, consuming a disproportionate amount of the petrol subsidy funded by government coffers.

“It is important that we create a mechanism that reduces the leakage to these groups while the government remains committed that the everyday rakyat continues to benefit from the subsidy,” Johan added.

Johan noted that the tiered pricing mechanism implemented for diesel has shown “immediate benefit”, with a 30% reduction in diesel sold at the pumps and an increase in the sale of commercial diesel.

Under the tiered pricing system for the targeted diesel subsidy, logistics players with a fleet card continue to enjoy subsidised diesel at RM2.15, while the rest consume it at the set pump price of RM3.35.

Commercial diesel can also be purchased at unsubsidised market price.  

Edited ByLiew Jia Teng
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