World Oil Prices Are Rising Rapidly! The Government Needs To Spend RM4+ Billion To Maintain The Ceiling Price

The government estimates that an additional RM4.22 billion will be spent this year to maintain the ceiling price set for fuel in the face of the rising global oil prices. Situations that require an increase in the number of subsidies include the price of RON 95 petrol and diesel, liquefied petroleum gas (LPG), and cooking oil.

The ceiling price set for RON 95 is at RM2.05 per liter and diesel at RM2.15 per liter, both of which have reached the ceiling price since February 10. For LPG, it is priced at RM1.90/kg, while oil remained at RM2.50/kg from 1997.

"The government is ready to bear the increase in subsidy expenditure to safeguard the well-being of the people and the continuity of businesses, especially small traders,” said Finance Minister Datuk Seri Tengku Zafrul Abdul Aziz.

"A total of RM3.78 billion has been allocated for 2021 but based on current global market prices, the government expects additional subsidies to increase to RM8 billion, which is RM4.22 billion higher than the original allocation," he added.

In the same statement, he also explained how in 2019, a total of RM6.32 billion was spent on subsidies. However, this amount was reduced to RM2.16 billion by 2020. This sharp reduction in oil prices is due to the "oil war" between world oil producers that caused oil prices in April last year to fall as low as US$ 20 (about RM82.30) for one barrel.