Government Delays Targeted Subsidy For RON95 Petrol

Deputy Finance Minister Ahmad Maslan has revealed in parliament that the government has decided to “slightly” delay the planned targeted subsidy for RON95 petrol. The move, which had been initially proposed in 2014, has been in development by the federal administration since last year in response to ballooning oil prices.

In February, Ahmad stated that the government had spent RM50.8 billion in 2022 for subsidies on petrol, diesel, and liquefied petroleum gas. Of this amount, 35% of it was enjoyed by the T20 income group, while the M40 and B40 used up 41% and 24% of the subsidies respectively.

The deputy minister calculated that if the current blanket subsidy was amended to remove the T20 group from enjoying the subsidised fuel, it would translate to RM17.8 billion in annual savings. He added that for the T20, they are capable of purchasing petrol at higher prices compared to B40 individuals.

Moreover, the government’s expenditure can actually go up to RM66.3 billion if the subsidies for cooking oil, electricity, chicken, eggs, and other consumer goods are taken into account. Taking it a step further, including cash handouts for education, transport, and agriculture inflate the bill to RM91.4 billion.

While the targeted subsidy for RON95 has been delayed until further notice, Ahmad clarified that such a mechanism for diesel and electricity is still in the works. As for when they will be implemented, he just said to wait for the announcement.

Similar to the targeted fuel subsidy, the government has been planning on excluding the T20 from receiving electricity subsidies. While the exact mechanism has not been revealed, it has been explained that the government will use several databases to determine an individual’s eligibility, including data from JPJ, IRB, Bank Negara, and more.

For context on how much the government subsidises fuel in the country, we can look at the differences between the nationwide fuel prices and the price of the non-subsidised fuel recently implemented in Perlis. Subsidised RON95 and diesel are currently priced at RM2.05 and RM2.15 per litre respectively; on the other hand, non-subsidised RON95 is sold at RM3.22 per litre and non-subsidised diesel is sold at RM3.45 per litre.

(Source: The Star)

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