Millions of Malaysians may pay 50% more for fuel as govt mulls slashing monthly quota for subsidised RON95

Millions of Malaysian motorists using RON95 could see themselves paying at least double the current price of the fuel from next month, as Putrajaya is reportedly considering reducing the monthly subsidised petrol quota by a third.

Financial daily The Edge quoted sources as saying that the government plans to cut the 300-litre monthly entitlement for subsidised RON95—the cheaper and more popular petrol variant, currently fixed at RM1.99 per litre for Malaysian citizens – to just 200 litres.

The move means most Malaysian motorists may exhaust their subsidised quota before the end of the month and will have to pay RM3.87 per litre, based on the latest fuel prices which have spiked globally since the start of the US-Israeli aggression against Iran.

A rough scenario of the impact on consumers can be illustrated using a 1.5cc car – one of the most common engine types among Malaysian households – which, under mixed driving conditions, averages 12km per litre.

A 200-litre limit for subsidised petrol means a motorist with a 1.5cc vehicle could travel up to about 2,400km per month, or an average of 80km per day for commutes, social visits, and other daily activities.

Most motorists will find the 200-litre limit barely sufficient for the month, and depending on vehicle size, travel distance, and usage, the majority of users are likely to start paying the RM3.87 price within the same month.

When the 300-litre limited subsidised RON95 plan – or Budi95—came into effect in September last year, many questioned whether it was sufficient, especially for those with long daily commutes in heavy traffic.

There were also complaints that the additional RON95 quota for e-hailing drivers does not cover part-time drivers, or small-time traders who depend on their private vehicles.

The government had then defended the new rules, stating the quota was more than sufficient for 90% of motorists.

Massive diesel surge

Meanwhile, users of diesel-powered vehicles have been heavily impacted by a surge in prices, from RM3.04 per litre before the war on Iran to RM5.52 per litre from today – a massive increase of RM2.48 in less than a month.

The spike means the RM300 monthly diesel subsidy reimbursement paid to eligible individuals will not cushion the financial impact, especially for small business owners who use the fuel for transportation, many of whom are not eligible to apply for the fleet card, which is subject to various rules and documentation.

In June 2024, the government removed blanket subsidies for diesel – trading it at the pump price of RM3.35 per litre at that time – and replaced it with a targeted subsidy programme through various methods, including monthly cash payments to compensate eligible users for the higher cost.

Even so, major suppliers of goods and raw materials said they could not guarantee that the prices of goods and services would be maintained, with several companies issuing notices on the first day to inform customers of impending price increases.

The issue of fuel prices has dominated the political debate on the back of decades of promises by Prime Minister Anwar Ibrahim and his Pakatan Harapan coalition to lower fuel prices by returning the nation's petroleum profits to the people.

Anwar has accused critics of manipulating his words, saying the pledge was made at a time when global fuel prices were low, and giving the example of how a litre of petrol in Saudi Arabia was 50 sen while the same amount was priced at RM2.21 in Malaysia.