Malaysia cuts subsidised fuel quotas on global oil price surge

Malaysia’s government will cut subsidised allocations for its most popular fuel from April as it seeks to curb leakages and relieve fiscal pressure from a surge in oil prices owing to the Middle East conflict.

Prime Minister Anwar Ibrahim announced that the monthly quota for subsidized RON95 petrol will be cut from 300 litres to 200 litres per citizen. The subsidized price will remain unchanged at 1.99 ringgit (US$0.50) per litre.

“This step is taken while we wait for global oil supply conditions and the broader economy to stabilize, but there are no signs of that yet,” Anwar said in a televised address on Thursday. 

The move comes as Malaysia faces a sharp increase in fuel subsidy spending. Monthly subsidies for petrol and diesel have surged to 3.2 billion ringgit, up from 700 million ringgit previously. The subsidy bill is expected to hit 4 billion ringgit a month as Brent oil prices reached copy00 a barrel, the finance ministry said in a separate statement on Thursday. 
While elevated oil prices support government revenues and benefit state energy firm Petroliam Nasional Bhd, they also risk fuelling inflation. The government said the quota reduction aims to curb misuse and ease fiscal pressure while maintaining support for consumers.

Despite rising international prices, diesel in Sabah and Sarawak will continue to be sold at 2.15 ringgit per litre. However, Anwar said new limits will apply: private light vehicles will be capped at 50 litres, public vehicles under three tonnes will be limited to 100 litres, and those above three tonnes have a maximum 150 litres for each transaction.

The government is also considering other measures to cut down fuel use, including working from home for both the public and private sectors.

Anwar thanked Iran for allowing Malaysian oil vessels to safely access the Strait of Hormuz. 

“There are countries that are much more severely affected than us, but this does not mean we have missed out on everything,” he said. “I am taking a more comprehensive approach to guarantee supply and at the same time manage demand more prudently and cautiously.”

Source: BangkokPost