Targeted RON95 subsidies under BUDI95 are projected to save the government RM2.5–4 billion annually by reducing subsidy leakage
KUALA LUMPUR: The shift to targeted RON95 petrol subsidies via the BUDI MADANI (BUDI95) scheme is projected to save the government between RM2.5 billion and RM4 billion annually.
The Finance Ministry stated these fiscal savings result from reduced subsidy leakage, not from cutting protection for the public.
The ministry explained the savings estimate is subject to global crude oil price movements and currency exchange rates.
It provided this detail in a parliamentary reply to a question from Datuk Seri Ismail Sabri Yaakob regarding post-rationalisation subsidy amounts and savings.
The retail price of RON95 is still set using the automatic pricing mechanism (APM).
This mechanism factors in world crude oil prices, refining and distribution costs, and exchange rates.
The BUDI95 initiative does not alter the APM but improves the method of distributing the subsidies it generates.
This refined approach allows the government to control subsidy expenditure growth more effectively.
The ministry highlighted this is particularly important as global oil prices rise again.
