SHAH ALAM - Malaysia’s targeted fuel subsidy programme is expected to save the government between RM2.5 billion and RM4 billion annually, with the potential for the money to strengthen cash assistance and ease financial pressures on eligible households.
Finance Minister II Datuk Seri Amir Hamzah Azizan said the final savings generated by the Budi Madani RON95 (Budi95) programme in 2026 would be confirmed at the end of the year, depending on actual transactions, global fuel prices, exchange rates and verified consumption.
The savings are expected to be channelled towards targeted assistance, including Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (Sara).
However, the projected amount is not an immediate cash payment to Malaysians and its eventual impact will depend on how the funds are allocated.
How does BUDI95 generate savings?
Budi95 was introduced nationwide on Sept 30, 2025, allowing more than 16.55 million eligible Malaysian citizens to purchase RON95 petrol at a subsidised price of RM1.99 per litre, subject to a monthly quota.
Non-citizens and company accounts were moved to market pricing, which was approximately RM2.60 per litre at the programme's launch. The initiative aims to ensure government subsidies reach eligible Malaysians instead of benefiting those who do not qualify.
According to Amir, savings are expected to arise from reducing subsidy leakages and better targeting fuel assistance.
"The final figure is subject to adjustments based on actual transactions, weekly market prices, exchange rates and verified consumption and will be finalised at the end of this year," he said in the Parliament on Oct 28.
Why was the petrol quota reduced and restored?
The programme initially allowed eligible motorists to purchase up to 300 litres of subsidised RON95 monthly.
However, escalating geopolitical tensions in West Asia pushed global Brent crude oil prices as high as US$120 per barrel, increasing Malaysia's fuel subsidy expenditure.
Amir said the government's combined monthly subsidy bill for RON95 petrol and diesel rose from approximately RM700 million in January to nearly RM5 billion in March, before reaching RM7.5 billion a month during the crisis.
The government reduced the basic monthly Budi95 quota from 300 litres to 200 litres from April 1, to manage costs and protect domestic fuel supplies.
"Without immediate action, the country faced a real risk of fuel shortages that could affect the daily lives of the people and the smooth running of economic activities," he said.
The decision was based partly on consumption data collected between October 2025 and May, which showed that fewer than 1 per cent of users consistently consumed more than 200 litres monthly.
Eligible Malaysians continued paying RM1.99 per litre during the temporary reduction, while ineligible users were charged market prices.
The government subsequently restored the monthly quota to 300 litres from Sept 1, following improvements in fuel supply conditions. Monthly subsidy expenditure stood at approximately RM4 billion after the restoration, according to Amir.
What could the savings mean for ordinary Malaysians?
The projected savings could benefit households through stronger targeted financial assistance rather than a direct distribution of the money to every citizen.
1. Potentially stronger cash assistance
The government has identified STR as one of the programmes that could receive funding from the savings.
Additional resources could help support eligible households facing expenses such as food, housing, transport and utilities. However, the final allocation and any changes to individual assistance amounts have not been confirmed.
2. More support for essential purchases
Sara provides assistance for eligible recipients to purchase approved essential goods.
If additional funding is channelled into the programme, it could help strengthen support for qualifying households managing their daily necessities. The extent of any expansion would depend on subsequent government decisions.
3. Better protection against fuel subsidy leakages
Targeting subsidies towards eligible Malaysians is intended to reduce public spending on fuel consumed by people who do not qualify.
The government can then redirect resources towards assistance designed to reach those who need it, although the projected savings will fluctuate with fuel prices, exchange rates and consumption.
4. Continued support for eligible motorists
The programme's restored 300-litre monthly quota allows eligible motorists to purchase more subsidised petrol than during the temporary restriction.
E-hailing drivers who require additional fuel allocations can also qualify for extra litres based on verified travel distances.
Nevertheless, the subsidy system does not mean every Malaysian will receive an equal share of the projected savings.
What about diesel subsidies?
The government is also maintaining targeted support for eligible diesel users.
As of Oct 27, more than 291,000 eligible users nationwide had received an additional monthly allocation of 100 litres under the Budi Madani Diesel programme.
Eligible Malaysians could purchase subsidised diesel at RM2.10 per litre, with a basic monthly allocation of 300 litres that could be used flexibly for subsidised diesel or RON95, subject to the remaining entitlement.
As of Oct 26, more than 27,200 privately owned company pickups and jeeps belonging to over 19,350 companies had registered under the expanded Subsidised Diesel Control System.
The government had also approved nearly 21,700 applications to transfer diesel subsidy entitlements to another eligible Malaysian citizen who was the actual user of the vehicle as of Oct 27. More than 12,160 approved applications came from Sabah, Sarawak and Labuan.
When will the savings be confirmed?
Amir said the government would continue monitoring fuel consumption and subsidy distribution to prevent ineligible parties, including non-citizens, from benefiting from assistance intended for Malaysians.
The final Budi95 savings for 2026 are expected to be confirmed by year-end.
For households, the key question is how much of the projected RM2.5 billion to RM4 billion will ultimately translate into stronger assistance. Until the final figures and allocations are announced, the savings remain a projected fiscal benefit rather than a confirmed increase in individual aid.