Fuel subsidies to stay despite rising oil prices says National Budget Office director

Malaysia’s fuel subsidy which caps RON95 petrol at RM 2.05 and Euro 5 B10 diesel at RM 2.15 will remain. The announcement came from the National Budget Office Director, Datuk Johan Mahmood Merican during an interview with Bernama TV.

Datuk Johan said that the government is committed to protecting the people from the impacts of the sharp rise in inflation despite rising global oil prices resulting from the Russia-Ukraine war.

The decision was made taking into account the fact that the country is still in the early stages of recovery from the Covid-19 pandemic.

He added that the unrest between Russia and Ukraine had seen oil prices spiking to more than USD 100 per barrel, Budget 2022 had not seen this coming as the projected or assumed oil price had been USD 67 per barrel.

Also read: MoF: Fuel subsidy to be reviewed, RM 28 billion subsidy cost for 2022 if no intervention

Previously, it was reported that the Ministry of Finance will review the fuel subsidy in light of the escalating crude oil prices.

Finance Minister, Datuk Seri Tengku Zafrul had said that Malaysia could be paying up to RM 28 billion in subsidies for petrol, diesel, and liquefied petroleum gas (LPG) for 2022.

Currently, fuel prices are at their highest since 2008 with the unsubsidised RON97 selling at RM 4 per litre at the time of writing and showing no signs of reducing for the time being. If the government were to remove the fuel subsidy, RON95 will also see prices rise to around RM 4.

Also read: Oil price highest since 2008, but Malaysia is not profiting from it, here’s why