Implementation of the BUDI MADANI Diesel programme at RM2.10 per litre is set to save up to RM2 billion annually by curbing fuel subsidy leakages.
PUTRAJAYA: The implementation of the BUDI MADANI Diesel programme (BUDI Diesel) at a subsidised price of RM2.10 per litre of diesel from July is expected to generate savings of up to RM2 billion annually through the reduction of fuel subsidy leakages.
Second Finance Minister Datuk Seri Amir Hamzah Azizan said the targeted diesel subsidy reform aims to standardise the diesel subsidy mechanism nationwide through a single system that is uniform, transparent, and user-friendly, adding that it was in line with the government’s principle of ensuring that subsidies reach those who are genuinely eligible while safeguarding the stability of domestic diesel supplies.
“Through this targeted subsidy programme, we can save up to RM2 billion a year. These savings will be returned to the people through the reduction of diesel prices to RM2.10 per litre,” he said at a press conference here today, in the presence of Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali and Treasury Secretary-General Tan Sri Johan Mahmood Merican.
The government’s previous monthly subsidy burden for petrol and diesel was approximately RM800 million, but this surged sharply to nearly RM4.7 billion in March and RM4.9 billion in April following rising global oil prices, he said.
At the same time, diesel consumption also increased abnormally from around 624 million litres per month to almost 1.2 billion litres per month, indicating the existence of significant leakages.
Amir Hamzah said the leakages occurred through activities such as cross-border smuggling and abuse of subsidy channels, where parties that should have been purchasing unsubsidised diesel were instead obtaining subsidised diesel from petrol stations, which not only placed pressure on government finances but could also disrupt and threaten domestic diesel supplies.
According to him, diesel consumption patterns in Sabah and Sarawak also showed unusual trends, with current usage approaching two billion litres annually compared with an estimated actual requirement of around one billion litres annually.
He pointed out that the figures indicate leakages of as much as one billion litres per year, which need to be addressed more effectively.
Consequently, the government is introducing BUDI Diesel using a MyKad verification mechanism, similar to BUDI RON95, to ensure that only eligible Malaysians receive the subsidy.
“A total of 700,000 private diesel vehicle owners will enjoy subsidised diesel at RM2.10 per litre through the use of MyKad under the BUDI Diesel mechanism at all petrol stations nationwide,” he said.
For existing BUDI Diesel Individual recipients, the current RM400 monthly cash assistance will be replaced with direct diesel subsidies through MyKad verification at petrol stations.
Amir Hamzah said current beneficiaries will be automatically migrated to the new mechanism without needing to submit any additional applications.
“As preparation for full implementation on July 1, early access to BUDI Diesel will be opened from June 27, 2026, for eligible private diesel vehicle owners in Peninsular Malaysia,” he added.
