According to Finance Minister, the authorities will test the new petrol subsidy mechanism at several petrol stations in the country in order to target petrol subsidies more closely to the target groups.
He said that the government is not yet in a position to set a timeline for the implementation of the new petrol subsidy mechanism as it still needs to be approved by the cabinet.
The government has already allocated RM37.7 billion as subsidies for petrol, diesel and LNG. For every RM1 of subsidies allocated, 53 sen will now benefit the T20 group.
With the soaring price of RON97 petrol, many in the upper T20 income group have switched to RON95 petrol. The 65% drop in domestic sales of RON97 petrol is proof that many people who used to buy RON97 petrol have switched to RON95 petrol.
If the T20 high income group buys 50 litres of RON95 petrol, the government subsidises RM125. If these groups refill their petrol 3 times a month, this means that the government subsidises RM4500 per year for these groups, which is more than the cash assistance that the government gives to the B40 and M40.
Under the Government’s fuel subsidy mechanism, the current rate is RM2.05 per litre for RON95 petrol and RM2.15 per litre for diesel, which means that the Government is subsidising approximately RM2.32 per litre for RON95 petrol and RM2.52 per litre for diesel.
