The government has reiterated that the country’s fuel subsidy bill for 2022 is projected to rise to about RM30 billion, based on global oil prices being what they are at present. In May, that projection for 2022 was placed at RM28 billion, but this was then revised to RM30 billion earlier this month.
Economy minister Datuk Seri Mustapa Mohamed said this would be 170% higher than the RM11 billion spent on fuel subsidies last year. He said that the year-to-date Brent crude oil price currently stands at around US$106 per barrel, a discrepancy of US$40 against the federal Budget 2022’s assumption that the average crude oil price would be priced at US$66 per barrel.
He said that Malaysia, despite being one of Asia-Pacific’s largest producers and exporters, is not impervious to the challenges of recent years, including the Russian-Ukraine war, the plunge in oil prices in 2014 and the Covid-19 pandemic, the Malay Mail reports.
Mustapha said the war in Ukraine and the subsequent sanctions have led to a lot of uncertainty and volatility in the commodities market. “Energy prices — significantly oil — have spiked to triple-digit levels, putting upward pressure on prices globally,” he said.
The goverment has said that it is reviewing the fuel subsidy programme and is looking at implementing targeted subsidies to ease its increased spending on subsidies, although no time frame for this implementation – or how it will be accomplished – has been offered.
Earlier this month, finance minister Tengku Datuk Seri Zafrul Abdul Aziz said that the government still has sufficient money to continue providing fuel subsidy in a blanket manner despite rising global crude oil prices, but indicated that targeted subsidies is the long-term plan.