The government is expected to finally announce the targeted fuel subsidy scheme soon, and it looks like the original plan to offer subsidies based on vehicle engine capacity has been dropped, the Malay Mail reports.

During Budget 2019, finance minister Lim Guan Eng said that the government planned to subsidise owners of vehicles and motorcycles with engine capacities below 1,500cc and 125cc respectively a subsidy rate of 30 sen per litre, for RON 95 petrol. This would be capped at 100 litres per owner of a vehicle and 40 litres for those with motorcycles.

The scheme will no longer utilise this method, and will instead switch to cash being directly given to lower income households already enlisted for the cost of living aid (BSH) scheme, sources within the domestic trade and consumer affairs ministry (KPDNHEP) revealed to the publication. They said that the government plans to review the disbursement mechanism every quarterly.

The decision to distribute cash to eligible recipients – similar to that being done for the current BSH programme – was reached after prolonged deliberation, one that saw policymakers considering multiple proposals for nearly a year.

Economists have said that such a method would be “difficult” to implement and prone to leakages, given the lack of reliable data to accurately identify the poor. This often results in benefits not reaching the intended target, or even leakages that end up channelling resources to undeserving households.

However, sources from the ministry said that the government had built up an improved database, one that has updated income/vehicle ownership information extracted from BSH and road transport department (JPJ) data. “We will use the BSH list to decide who gets the cash. We can cross-check it against data from JPJ. From there, we can see who owns what vehicle. Those who don’t own any will not receive the cash,” one of the sources said.

Another source said the government has devised “other safeguards” that can be used to vet applicants against their income and vehicle ownership data. “There will be other ways to check but let’s wait for the minister. He will explain,” he said. Domestic trade and consumers affairs minister Datuk Seri Saifuddin Nasution Ismail was expected to announce the cash petrol subsidy programme on Wednesday, but this had to be postponed as he had to be in Parliament.

Currently, the government is subsiding RON 95 petrol for all users, capping the price of the fuel at RM2.08 a litre. According to official data from the government, Malaysians use about 1.2 billion litres of petrol monthly, with up to 90% of consumption being for RON 95. It was also previously reported that the price cap on RON 95 petrol will be lifted once the targeted fuel subsidy scheme comes into effect.