Govt still shoulders RM10bil diesel subsidies annually

Despite rationalising diesel subsidies, the government continues to bear the burden of RM10 billion in annual subsidies, says Finance Ministry.

(NST) – Despite rationalising diesel subsidies, the government continues to bear the burden of RM10 billion in annual subsidies.

In a parliamentary written reply, the Finance Ministry said that this amount included RM4 billion per year for public transport and logistics sectors, with diesel prices maintained at RM1.88 per litre for 10 types of public transport vehicles and RM2.15 per litre for 23 types of logistics vehicles.

Additionally, RM3.3 billion is allocated for diesel users in Sabah and Sarawak, who also enjoy the RM2.15 per litre rate. Fishermen benefit from RM1.2 billion in subsidies, with diesel priced at RM1.65 per litre. Another RM1.8 billion is provided through cash assistance programmes Budi Individu and Budi Agri-Komoditi.

The ministry said that the total annual subsidy had reduced from RM14 billion last year to RM10 billion.

This reduction is attributed to targeted subsidies, saving the government RM4 billion in operating expenses each year.

The ministry said this in response to Ahmad Fadhli Shaari (PN-Pasir Mas), who questioned the anticipated savings from the rationalisation of fuel subsidies.

On May 21, Prime Minister Datuk Seri Anwar Ibrahim announced the cabinet’s decision to implement fuel subsidy rationalisation, focusing on diesel.

Subsequently, on June 9, Finance Minister II Datuk Seri Amir Hamzah Azizan declared that diesel prices in Peninsular Malaysia would be set at RM3.35 per litre, effective from June 10, following the market rate based on the Automatic Pricing Mechanism formula.

Amir Hamzah said that this move would save the country RM4 billion annually and enhance its long-term financial position.

He also said that diesel prices would be announced weekly by the Finance Ministry, with ongoing monitoring to prevent price instability.