Government working on finalising RON 95 fuel subsidy

The government is set to begin its procurement process to acquire the necessary services or systems to implement the targeted RON 95 fuel subsidies, which is slated to begin from Q2 2019 following the tabling of Budget 2019 last week.

In a report by The Star, domestic trade and consumer affairs minister Datuk Seri Saifuddin Nasution Ismail revealed the finance ministry will be responsible in carrying out the process within a week or two.

He said handing out cash (to those that qualify for the subsidies) is not an option, and other methods such as cards are being looked into. “Whether it is a card in the form of chips or magnetic stripes, it has to be cheap but secure. So those are the options that we are looking into. We are now in the process of finalising and fine tuning the requirements. We are almost there,” said Saifuddin.

“There are proposals from various companies that are prepared to share their expertise. We have no problem identifying potential companies and we are prepared to do an open tender process,” he added. Malaysians reportedly use around 1.2 billion litres of petrol monthly, with RON 95 being the most widely used (90%) compared to RON97 at 10%.

“Can you imagine the money the government needs to spend to subsidise RON95?” Saifuddin asked, adding that if the selected system is good enough, it could be considered for use for the subsidy of other consumer goods.

During last week’s Budget 2019 tabling, finance minister Lim Guan Eng said the fuel subsidy was targeted at the B40 group (salary of below RM3,000 monthly) and that a mechanism of the scheme would be worked out to prevent abuse. It was announced that owners of multiple/luxury cars will not benefit from the fuel subsidy.

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. Meanwhile, motorcycles with an engine displacing 125 cc of capacity or less will be allocated the subsidy at the same rate of 30 sen per litre, for up 40 litres a month.

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