Malaysia’s fuel subsidy bill swells to RM7 billion in April

MALAYSIA’S government expects to spend about RM7 billion (S$2.3 billion) on fuel subsidies in April, roughly 10 times more than what it was paying before the Iran war began. 

The Ministry of Finance said the total includes an additional RM75 million allocated to support three diesel assistance programmes as policymakers seek to cushion the impact of rising costs on consumers and industries. 

“Cost pressures can be translated to consumer prices if not controlled early,” Economy Minister Akmal Nasrullah Mohd Nasir said in a televised speech.

“We need to understand that this crisis is different from a normal shock because its effects can come in stages and last until next year.”

The subsidies amounted to RM700 million before the conflict, underscoring the growing fiscal strain from elevated energy prices.

Malaysia heavily subsidises retail fuel prices, making them politically sensitive and a key tool for managing living costs. It has kept the price of RON95 – the most popular grade of petrol – at RM1.99 a litre, among the lowest in the world.

The government said on Tuesday (Apr 14) that it would raise diesel subsidies for paddy farmers and increase monthly subsidy allowances for the agriculture sector. 

Diesel prices in Malaysia are at a record high of RM6.72 a litre. The government removed broad subsidies for the fuel in 2024, shifting to targeted support for specific groups.

Separately, the country’s state oil firm Petronas said on Wednesday that fuel supply at all its stations is secured until the end of June.

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Malaysia to boost biodiesel use to cope with Middle East conflict fallout 

The group said it is actively managing its supply chain to ensure sufficient stock across its network amid the global energy crisis. Around 50 per cent of Malaysia’s fuel needs are being supplied by Petronas Dagangan, it added.

Malaysia has pledged to boost the use of biodiesel to deal with the supply constraints as its economy comes under increasing strain from the conflict.

The government plans to raise the biodiesel blend to B15 from B10 to reduce reliance on fossil fuels, Akmal said.

Authorities will start with a B12 blend without involving any additional costs and using existing biodiesel blending infrastructure, he added. BLOOMBERG, REUTERS