The government expects to spend nearly RM40 billion on fuel subsidies this year, more than double the RM15 billion set aside in Budget 2026. Prime Minister Anwar Ibrahim shared the figure in a written parliamentary reply, pointing to high global crude oil prices as the reason for the sharp increase.
Monthly Costs Climbed From RM800 Million To RM5 Billion
Anwar, who is also finance minister, said the government spent around RM800 million a month on RON95 and diesel subsidies in January and February. That figure then rose sharply to about RM5 billion a month in March and April, as global oil prices climbed. If prices stay where they are, the full-year cost is expected to come close to RM40 billion.
The reason the bill keeps growing is the gap between the market price of fuel and the subsidised price you pay at the pump. When global oil prices rise, that gap widens, and the government has to spend more to cover the difference. It’s the same pressure that’s been building for months as the conflict in West Asia keeps oil prices elevated.
Pump Prices Stay The Same For Now
For now, none of this changes what you pay for your fuel. Eligible Malaysians still buy RON95 at RM1.99 per litre under BUDI95, and diesel remains subsidised at RM2.10 per litre under BUDI Diesel, or RM1.65 for fishermen. Public transport and freight vehicles pay RM2.05 for RON95 under a separate system, while their diesel is fixed at RM2.15.
Anwar said Malaysia’s petroleum supply remains stable, and that the government would keep its targeted subsidies in place while watching its fiscal position as the global situation continues.
The Pressure Behind RON95 Prices
A subsidy bill more than double what was budgeted is a cause for concern for the government. The International Monetary Fund flagged the risk of subsidy cost in its review of Malaysia’s economy earlier this year, BNM acknowledged it.
The more the bill grows, the harder it becomes to hold prices at RM1.99, which is why suggestions to trim the monthly quota or raise the price have kept coming up this year.
Or, you know, there’s always the LRT.
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