Govt’s fuel subsidy bill for 2026 expected to reach RM40bil

PETALING JAYA: The government is expected to spend nearly RM40 billion on fuel subsidies this year due to the global energy crisis, more than double the RM15 billion initially allocated in the 2026 budget.

Prime Minister Anwar Ibrahim said the government spent RM1.6 billion to subsidise RON95 petrol and diesel in January and February. The subsidy bill then surged to around RM5 billion a month for March and April.

“If the current market price (of crude oil) remains, the government is expected to spend close to RM40 billion to subsidise petroleum products for 2026,” he said in a written parliamentary reply to Salamiah Nor (PN-Temerloh).

Anwar, who is also the finance minister, said the increased expenditure would allow eligible Malaysians to continue pumping RON95 at the subsidised price of RM1.99 a litre under the BUDI95 scheme.

He added that diesel is subsidised at RM1.65 a litre for fishermen and also retails at RM2.10 per litre under the BUDI Diesel initiative.

There is also the subsidised petrol control system where RON95 is sold at RM2.05 per litre, while the price of diesel under the subsidised diesel control system is fixed at RM2.15 per litre.

“The nation’s supply of petroleum remains stable and sufficient. The Madani government will continue strengthening our measures to ensure our long-term supply and maintain the targeted subsidies, even as the global crisis prolongs.

“The government’s priority is ensuring that the people are protected, especially those most vulnerable to cost pressures, while closely monitoring our fiscal position and capability to continue the subsidies,” said Anwar.

Fuel leakage, smuggling arrests

Separately, domestic trade and cost of living minister Armizan Mohd Ali said 212 people linked to 302 cases of fuel misappropriation in Peninsular Malaysia had been arrested so far this year. In comparison, 348 arrests were made in 2025, involving 480 cases.

Armizan said 64 people were arrested in Sabah for similar cases while 26 were nabbed in Sarawak.

Total arrests in Sabah and Sarawak for 2025 stood at 113 and 17, respectively.

“From 2023 up until June 9 this year, a total of 2,311 arrests were made involving 4,145 cases related to the misappropriation and smuggling of subsidised diesel and petrol,” he said.