T20 spend RM399 per month on RON95 while B40 spend RM243, says Zahid

Deputy prime minister Ahmad Zahid Hamidi says ‘irresponsible individuals’ are taking advantage of the subsidy system to smuggle fuel.

PUTRAJAYA: Deputy prime minister Ahmad Zahid Hamidi says a recent report has found that those in the T20 income group spend RM399 per month on RON95 petrol while the B40 spend RM243, proving that the current petrol subsidy method is ineffective.

In his speech at a symposium on cost of living here, Zahid said that “irresponsible individuals” were taking advantage of the current subsidy system to smuggle fuel, especially diesel.

“These findings demonstrate that the bulk subsidy approach does not achieve its fundamental objectives because the target groups that should be assisted do not receive optimal benefits,” he said in his speech, read by acting domestic trade and cost of living minister Armizan Mohd Ali.

“Therefore, it is not appropriate for the government to continue with an approach that is inherently unfair to the target groups, namely the groups of people who truly need assistance.”

He added that the government has had to bear an increasingly high subsidy bill, with the total amount spent on subsidies last year reaching RM91.9 billion.

Zahid said while RM64 billion was initially allocated for subsidies this year, the government estimated that the sum would be closer to RM80.9 billion based on current expenditure.

Yesterday, economy minister Rafizi Ramli said the government would introduce a targeted subsidy mechanism for RON95 in the second half of 2024.

Speaking in the Dewan Rakyat, he said the initiative would optimise Putrajaya’s resources and ensure the subsidy is delivered in a targeted manner to “those who need it the most”.

Currently, RON95 is subsidised by Putrajaya and sold at RM2.05 per litre.

Unveiling the 2024 budget last month, Prime Minister Anwar Ibrahim said the subsidy for diesel would be rationalised in phases as part of the government’s efforts to rationalise subsidies as a whole.

The federal government spent some RM55.443 billion on various subsidies last year, an increase of 322.1% compared to 2021.