The new petrol subsidy programme (PSP) is set to start next year, which means that unless you’re eligible, RON 95 petrol is set to be costlier. The government has previously said that the jump from the current subsidised rate to the market price will be gradual, and now we have more details on how gradual it’ll be.

According to deputy minister of domestic trade and consumer affairs Chong Chieng Jen, RON 95 petrol prices will move up by one sen per week till it reaches the market price, Harian Metro reports.

“The decision to float the fuel price is to reduce the rakyat’s cost of living and to avoid the prices of goods rising sharply. We will float the price of petrol in stages, by one sen a week until it reaches market rates,” he said in parliament today in response to a question on how the ministry plans to avoid a spike in prices of goods once PSP kicks in. He added that KPDNHEP also has the price control act to ensure that traders do not take advantage of PSP for profiteering.

Chong said that PSP will not be applicable in Sarawak, Sabah and Labuan, where motorists will continue to enjoy RON 95 petrol at the current price of RM2.08 per litre. Previously, minister Datuk Seri Saifuddin Nasution Ismail was quoted as saying that this is because it does not cost so much for the government to subsidise RON 95 in East Malaysia, given that there are more diesel car users there.

Details of the PSP scheme are as follows:

  • The subsidy will only be given to car/motorcycle owners, and is limited to one vehicle per recipient. If a person owns a car and a motorbike, then he/she will receive the higher subsidy, which is for the car. The car or motorcycle must be registered under the recipient’s name.
  • The subsidy rate will be capped at RM30 a month for car owners, and RM12 a month for motorcycle owners.
  • The government will reimburse the subsidy once every four months, so car owners will receive RM120 and motorcycle owners will receive RM48 every four months. The payment method will see cash being directly credited into the recipient’s registered bank account. The first payment is scheduled for April 2020.
  • Only those who are entitled for cost of living aid (BSH) assistance, with their names listed in the BSH database for receiving such allowances, will be able to receive the new petrol subsidy. All handicapped people will also be given the subsidy.
  • The household income of the recipient must not be more than RM4,000 per month.
  • To qualify, a recipient can only own a maximum of two cars and two motorcycles at any one time in his/her household. See the info-graphic panel above for a clearer picture of what vehicle combination qualifies and what doesn’t.
  • For cars, the pre-requisite is that the engine displacement must be:
    1,600 cc or below
    – or above 1,600 cc, but only for cars that are 10 years old and above
  • For motorcycles, the pre-requisite is that the engine displacement must be:
    150 cc and below
    – or above 150 cc, but only for motorcycles that are seven years old and above

Saifuddin said that a total of 2.9 million people are expected to benefit from the new subsidy scheme, which will cost the government about RM65.4 million a month. This is lower than the average of RM133 million it says it currently spends weekly in fuel subsidies.

He said that if the price of petrol drops below RM2 per litre, the government will relook at the subsidy and may defer its implementation.

Without the price cap in place, RON 95 petrol would actually be priced at RM2.36 per litre this week based on the finance ministry’s Automatic Price Mechanism (APM) calculations.