The government has kicked off its fuel subsidy rationalisation programme with the announcement that diesel prices in Peninsular Malaysia will be floated, and will retail at RM3.35 per litre starting from midnight on June 10 (Monday).
This means that from tomorrow, the price of Euro 5 B10 and B20 diesel in the peninsula will cost RM1.20 (or 56%) more than the current capped price of RM2.15, which has been in place since February 2021. While not mentioned in the press statement, the price of Euro 5 B7 – which presently costs 20 sen per litre more – should be adjusted to RM3.55 per litre.
According to finance minister II Datuk Seri Amir Hamzah Azizan, the new retail price of the fuel is based on the automatic pricing mechanism (APM) formula for the month of May. He added that under the targeted diesel subsidy implementation, the government has set diesel fuel prices for eligible sectors as follows:
- Subsidised Diesel Control System (SKDS) 2.0, which provides fleet cards to eligible logistics vehicles to mitigate the impact of the diesel price on consumer goods prices, is set at RM2.15 per litre.
- Subsidised Diesel Control System (SKDS) 1.0 for land public transport, including school buses, express buses, ambulances and fire engines remains at RM1.88 per litre.
- Subsidised diesel for fishermen is maintained at RM1.65 per litre.
The price float for diesel follows on the announcement made by prime minister Datuk Seri Anwar Ibrahim on May 21 that the government was set to implement targeted fuel subsidies, starting with diesel in the peninsula, with that for Sabah and Sarawak to be set aside until later. For now, diesel remains priced at RM2.15 in Sabah, Sarawak and Labuan.
The removal of the blanket subsidy for diesel will see targeted subsidies being dispensed via the Budi Madani assistance programme. Announced on May 27, the programme is open to private owners of diesel-powered vehicles as well as agriculture smallholders in Peninsular Malaysia, with eligible recipients in both categories set to receive a RM200 monthly sum in financial assistance.
It is worth noting that the RM200 aid will cover the first 167 litres of diesel. If you use any more than that per month, your fuel spend goes up. For a typical diesel pick-up doing around 10 km/l, that works out to an average mileage of 1,670 km per month before the “subsidy” runs out.
In any case, those whose applications for diesel subsidies have been approved by June 3 will soon be receiving their first Budi assistance payments. “The first batch of more than 30,000 recipients will receive their Budi Individu and Budi Agri-Komoditi payment of RM200 into their bank accounts on June 10,” Amir said via a statement.
The bigger question is of course how this will play out elsewhere beyond the fuel equation, in terms of the price climbs that will surely come, but the effects should be seen soon enough. Mind you, we haven’t even adjusted petrol yet. Share your thoughts on the matter with us in the comments section.
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