Government may remove price cap on RON 95 petrol when targeted fuel subsidy scheme is introduced

The government may remove the price cap on RON 95 petrol once the targeted fuel subsidy scheme comes into effect. According to domestic trade and consumer affairs minister Datuk Seri Saifuddin Nasution Ismail, no decision has been made as yet, but Putrajaya is exploring the available options, The Star reports.

“We have two options. We could remove the cap once the targeted subsidies come into effect, or we could maintain it. The Cabinet has not decided on this yet. We will also have to decide on whether the targeted subsidies will be based on the current capped price, or on a float pricing system,” he said.

Following the introduction of the weekly fuel price float system at the start of the year, it was announced in February that the retail price of RON 95 petrol would remain capped at RM2.08 per litre even if the market price of crude pushed the pump price beyond that level.

The targeted fuel subsidy – meant for the bottom 40 (B40) low-income group – was announced by finance minister Lim Guan Eng in Budget 2019, and is expected to be introduced sometime in the middle of the year.

The scheme will offer a subsidy of 30 sen per litre up to 100 litres a month for cars with an engine capacity of 1,500 cc and below, while motorcycles with engines below 125cc will get 40 litres of RON 95 a month at the same rate.

Earlier this month, the government said that the subsidy, which is expected to be limited to cost of living allowance (BSH) recipients, will likely be banked in directly into the accounts of those eligible each month.

Saifuddin reiterated that the ministry plans to use the BSH to finalise the number of those eligible for the aid. “We are keen on using this method, among other methods that have been proposed. If the Cabinet agrees that this method is best, we can immediately start disbursing the funds to recipients at the end of each month,” he said.

He added that the ministry was awaiting the updated BSH database before the scheme can proceed, but said it should be ready very soon. “They are currently cleaning up the data and are at the final stages. We want to ensure the data is credible – the deserving must be included and those who do not deserve assistance must be removed,” he said.

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