Extra RM4bil subsidy if no petrol price adjustments
KUALA LUMPUR: The fuel subsidy is estimated to rise by an additional RM4bil this year if no adjustments are made to petrol prices, which stand at RM1.90 per litre for RON 95 and RM2.50 per litre for RON 97.
Prime Minister Datuk Seri Najib Tun Razak said at a press conference Wednesday, after a briefing by Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz, that subsidy costs for fuel would rise by this amount if no adjustments were made in the face of higher crude oil prices.
This would mean that the allocation for fuel subsidy under Budget 2011, which was set at RM10bil based on oil prices hovering around US$85 (RM259) to US$90 (RM274) per barrel, would rise to RM14bil this year.
Besides this, the Government has also allocated RM4bil for other subsidies. For 2010, the fuel subsidy came up to RM10bil.
Economists have also estimated that should oil prices remained above US$100 (RM305), the Government might need to fork out an additional RM3.5bil to RM4bil for the fuel subsidy.
Najib added that the deficit would depend on how much revenue the Government would get against the increase in subsidy costs.
The Government has targeted a budget deficit at 5.4% of gross domestic product for this year compared with 5.6% last year while the target was to lower the deficit to 2.8% by 2015.
Last month, Najib said there could be a review of the fuel subsidy should unrest in the Middle East continued although, so far, there were no plans to do so.
The price of RON 97 petrol was last raised on Feb 1, up from an initial 10 sen hike on Jan 4. In December, RON 95 petrol and diesel rose 5 sen per litre to RM1.90 and RM1.85 per litre respectively.
tunku : we understand the government position on this issue. if the government increases the petrol prices than the people would not be happy and might go against the government but the people should think about the country too sometimes.4 billion is not a small sum.lot of rural development projects can be done with that amount.my suggestion to the government is that they should increase Ron97 even to RM3 but hold on to Ron95 and diesel as long as they can.we know all the Ron97 users are rich people so they can afford to pay for it.