The mechanism involved in the targeted fuel subsidy for RON 95 petrol has reportedly been finalised and will be submitted to the Cabinet for approval in October. Interestingly, the government will apparently use the household electricity bill as one of the factors to determine eligibility, states Sin Chew Daily, as picked up by The Star.

Deputy domestic trade and consumer affairs minister Chong Chieng Jen told the publication that only those who are in the B40 category, with monthly bills of between RM100 and RM200, will qualify for the scheme. “The use of electricity bills is only a reference point,” he said.

He said that those who are eligible will enjoy a RM30 monthly subsidy, or a subsidy of 30 sen for every litre of RON95 petrol capped at 100 litres a month. Motorcyclists, meanwhile, will be given a subsidy of RM12 each month.

The rate is close to that initially proposed during Budget 2019, although the method of dispensation and eligibility has been revised. Then, 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, capped at 100 litres per owner of a vehicle and 40 litres for those with motorcycles.

Chong said the funds will be transferred directly into a recipient’s bank account, in line with the system announced by the government in July, which will see cash being directly given to lower income B40 households already enlisted for the cost of living aid (BSH) scheme, similar to that being done for the current BSH programme.

The fuel subsidy was initially supposed to be announced in Q1 this year, but its introduction was delayed – it was last reported to be ready for roll-out in September. Following its eventual introduction, the price cap on the retail price of RON 95, which stands at RM2.08 per litre, will be removed by the government.

Based on Automatic Price Mechanism (APM) calculations, the current price of RON 95 petrol would be RM2.49 per litre without the price cap in place. At present, the government spends an average of RM133 million each week on fuel subsidies – for the coming week (September 28 to October 4), the government said it will absorb an estimated RM173.26 million in fuel subsidy costs for the period.