KUALA LUMPUR (Sept 23): The government is allocating about RM11 billion for the targeted petrol subsidy under Budi95 for the next 12 months, to cover the difference between the subsidised RON95 price of RM1.99 per litre and the unsubsidised price of RM2.60 per litre, according to the Finance Ministry.

At this juncture, the subsidised price of RM1.99 per litre is expected to be in place “for a while”, despite swings in global prices, said Finance Minister II Datuk Seri Amir Hamzah Azizan.

The subsidy rationalisation, which allows only Malaysians with valid licences to buy the fuel at RM1.99 per litre, will see the government save between RM2.5 billion to RM4 billion depending on oil prices, the minister told a press briefing on Tuesday.

“We will hang on to it for a while,” said Amir Hamzah at a press conference. “But it all depends on the circumstances,” he said.

The government spent about RM18 billion to subsidise 18 billion litres of RON95 petrol last year, when oil prices averaged above US$80 per barrel.

Brent, the global benchmark crude oil, has declined more than 10% so far this year to about US$67 amid mounting worries over a supply glut and easing geopolitical tensions.

While 90% of Malaysians use only up to 140 litres per month, Amir Hamzah said the government has decided to subsidise more as it is "comfortable" with the projected savings of at least RM2.5 billion.

This monthly ceiling also acts as a buffer against exploitation by irresponsible parties like smugglers or large companies, according to the ministry.

The RON95 monthly volume cap will also apply to East Malaysia, he said.

As to how the government plans to curb instances of misuse with the additional volume allocated to parties like e-hailing drivers, Amir Hamzah said data analytics will allow detection of unusual consumption patterns, which will then be monitored.

In a statement later in the evening, the ministry also refuted reports that it would be imposing a one-purchase-per-day limit on RON95 fuel.

While the government is reviewing measures to prevent abuse of the RON95 subsidy, the ministry said such a limit would not align with the objective of the subsidy scheme.

"The ministry wishes to clarify that the government has absolutely no plans to do so," it said. The clarification came after several news reports claimed that the government was going to restrict the sale of RON95.

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