The Budi Madani RON 95 (Budi95) targeted petrol subsidy initiative is expected to help the government save between RM2.5 billion and RM4 billion annually, depending on global crude oil prices. The estimate is based on crude oil trading at around US$75 (RM315.74) per barrel, as Bernama reports.
According to finance minister II Datuk Seri Amir Hamzah Azizan, the programme aims to replicate the notable success achieved by the targeted diesel subsidy system, which has already surpassed initial expectations by generating estimated savings between RM6 billion and RM7 billion, exceeding the government’s original target of RM4 billion for it.
He added that the final savings figure from Budi95 will be directly influenced by fluctuations in global oil prices. He said the savings will be channelled back to the people through direct assistance programmes, such as the Sumbangan Tunai Rahmah (STR) cash contribution and the Sumbangan Asas Rahmah (Sara) aid.
With the country spending nearly RM20 billion in petrol subsidies in 2023, and almost equally as much last year, the restructuring of the RON 95 subsidy from a blanket to a targeted approach is a necessary move it will help the country cut down its fiscal deficit.
In November last year, the ministry highlighted that the implementation of a petrol subsidy this year was expected to reduce the government’s total subsidy expenditure by around 21.9%, potentially saving the government RM3.6 billion.
While Budi95 will allow all Malaysian citizens with a valid driving licence to enjoy RON 95 petrol at RM1.99 per litre at an allocation of 300 litres a month, the savings to the government will come from transferring the full market fuel cost to individuals and entities who do not qualify for the targeted assistance.
The use of MyKad as a means of verification for eligibility should curtail the fuel’s accessibility to those who are not supposed to benefit from subsidies, such as foreigners and the commercial sector. It is expected that losses incurred from smuggling activities will also be reduced.
As for the floated market price of RON 95 to non-eligible users, that has not been defined yet, but early indicators have pointed out to it being around the RM2.60 per litre mark on.
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Will not be significant for now. In fact because petrol is more cheaper by 6 sen, people will use more. The economic analysis shows potentially 0.1% bigger subsidy bill. Hence, after a few months there will definitely be additional restrictions on subsidies, to save our money. Yes our money, not the gomen money. I don’t want my tax money being burned in your myvi.