KUALA LUMPUR: A total of RM28bil in fuel subsidies are needed to be paid by the government this year owing to a rise in global price of crude oil, says Deputy Finance Minister I Datuk Mohd Shahar Abdullah.
“Crude oil was at US$85 (RM359) per barrel in January this year, which was higher than the US$55 (RM232) per barrel for the same period last year.
“Owing to this, the government was forced to bear a drastic ten-fold increase in subsidies for petrol, diesel and liquefied petroleum gas (LPG).
“This meant an increase in subsidies from RM200mil in January last year to RM2bil for January this year,” he told Datuk Amiruddin Hamzah (Pejuang-Kubang Pasu) in Dewan Rakyat on Thursday (March 24).
He noted the government would have to pay subsidies up to RM28bil this year if crude oil price remains above the US$100 (RM422) mark per barrel compared to RM11bil for 2021.
Mohd Shahar said that Malaysians are paying RM2.05 for a litre of RON95 fuel, although it would cost RM3.70 per litre if there were no subsidies.
“As for diesel, he said that it cost consumers RM2.15 per litre although the actual non-subsidised price is actually RM4 per litre,” he added.
He noted the price of RON95 per litre in Malaysia is still low compared to other countries such as Saudi Arabia (RM2.61), Thailand (RM6), Indonesia (RM3.78) and Singapore (RM9.20).
To a supplementary question by Amiruddin, Mohd Shahar said that although Malaysia has benefited from high oil prices as an oil producing nation, the profits are used to balance off the cost of fuel subsidies.
He said the government estimated a profit of RM44bil based on Brent crude oil sold at US$68 (RM287) per barrel.
“But as of March this year, Brent crude oil hovered at about US$96 (RM405) per barrel,” he said.
Mohd Shahar said the figures given were merely an estimate, as the true cost could only be calculated after taking into account the impact of the Russian-Ukriane conflict.
He added that the government is currently studying ways to implement more targeted subsidies for specific segments of the Malaysian Family to ensure that only those eligible benefit from the subsidies.