The new targeted fuel subsidy mechanism that is supposed to be implemented in Q2 2019 is yet to be finalised by the government. This was said by deputy domestic trade and consumer affairs minister Chong Chieng Jen today in parliament, reported by The Star.

“At the moment, no final decision has been made on the mechanism. The finance ministry (MoF) has called for an open tender for parties interested to propose the best mechanism for the implementation of the targeted subsidy,” he said in reply to a question by Jempol MP Datuk Salim Sharif.

The deputy minister said earlier that the government wanted to ensure that only those eligible would benefit from the programme, and that his ministry was working closely with the MoF to ensure that the petrol subsidy would not be abused. “The subsidy system must be simple to use and can be used by all petrol stations throughout the country,” he added.

The plan to move from blanket fuel subsidy to targeted subsidies for the B40 group was announced by finance minister Lim Guan Eng in Budget 2019. The mooted plan was to offer subsidy of 30 sen per litre up to 100 litres a month, for cars with engines below 1,500cc. Motorcycles with engines below 125cc will get 40 litres of RON 95 a month at the same rate. Owners of multiple and “luxury cars” will not be eligible, although the definition of the latter wasn’t determined.

RM2 billion has been allocated for this new initiative, which is expected to benefit more than four million car owners and 2.6 million motorcycle owners. As for those who won’t be eligible, the government has said that it will ensure that the increase in RON 95 petrol prices will be gradual, once the price is floated.

“Let’s say on the first day of implementation, the difference (between controlled and market prices) is 30 sen (per litre). We don’t want that. Even though the price must go up by 30 sen, it should be gradually over a set period – say six to eight months,” domestic trade and consumer affairs minister Datuk Seri Saifuddin Nasution Ismail was previously quoted as saying.

Currently, the RON 95 petrol price is being capped at RM2.08 per litre, while RON 97 is sold for RM2.46 per litre. Diesel is also at its maximum capped price of RM2.18 per litre.