KUALA LUMPUR – The government is expected to save up to RM8 billion this year on electricity subsidies through the implementation of targeted subsidies, said the prime minister.
Noting that the savings will be channelled towards other expenses involving citizens’ welfare, Datuk Seri Anwar Ibrahim said that Putrajaya’s projected savings are subject to fuel prices.
“Beginning January this year, the government has carried out targeted subsidy programmes involving electricity subsidies, including by no longer providing full tariff subsidies to big companies that use high levels of electricity,” he said.
The prime minister said this during a press conference in Putrajaya after chairing a National Economic Action Council meeting, where it was also determined that the government will improve its diesel subsidy system.
He said electricity prices for the majority of households, namely the M40 and B40, will be maintained without a tariff increase, while those who use more electricity will pay more.
He said the electricity tariff will be maintained because the diesel subsidy needs to be improved first. Last year, the government spent RM13 billion on diesel subsidies.
“Diesel will continue to be subsidised by the government, but transport users will have to go through the Subsidised Diesel Control System’s fleet-card mechanism to ensure that we can detect who needs the subsidy.
“We will also look into which vehicles require the subsidy,” Anwar said, highlighting how there are discrepancies in the number of vehicles fueled by diesel and the amount of diesel consumed in the country.
“Checks have shown that diesel usage went up by 37.7%. From 6.1 billion ℓ in 2019 (pre-Covid-19) to 8.4 billion ℓ in 2022 (post-pandemic).
“However, the number of registered vehicles that use diesel only increased by 2.4%, from 2.08 million in 2019 to 2.13 million in 2022,” he noted.
The surge in diesel consumption indicated that there were leakages in the implementation of diesel subsidies, the prime minister added. In February, when tabling Budget 2023, Anwar had said that some RM10 billion worth of diesel was misappropriated last year.
Subsequently, Deputy Finance Minister I Datuk Seri Ahmad Maslan said that amendments to the relevant act are needed to enable action against modified foreign-registered vehicles in an effort to deal with diesel subsidy leakages.
Ahmad also said that the government expects to finalise its plans for targeted diesel subsidies between June and August this year. – The Vibes, May 15, 2023
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