KUALA LUMPUR: Diesel sales at petrol stations in Sabah and Sarawak reached an unusually high 200 million litres a month in March and April this year, says Datuk Seri Amir Hamzah Azizan (pic).
The Finance Minister II revealed that the figure is around twice the level expected based on the number of registered diesel vehicles, highlighting significant subsidy leakages.
He said the unusually high sales reinforced the government’s decision to standardise diesel prices nationwide at the unsubsidised retail rate while channeling subsidies directly to eligible Malaysians through the Budi Madani programme using MyKad verification.
“Setting the retail price at the unsubsidised level nationwide will help close these leakages,” he told the Dewan Rakyat on Thursday (June 25).
Amir Hamzah said the issue was particularly acute in Sabah and Sarawak, where non-citizens had also been able to purchase subsidised diesel at RM2.15 per litre.
The wide price gap with neighbouring countries had encouraged smuggling despite tighter enforcement efforts.
He said the reform was not only aimed at reducing fiscal leakages but also ensuring the country’s fuel supply remained secure amid global supply disruptions.
He said the government and PETRONAS had worked to diversify fuel supply sources following the conflict in the Middle East, but such efforts would be undermined if subsidy leakages continued unchecked.
Under the revised Budi Madani scheme announced on June 21, diesel prices at the pump will be standardised at market rates nationwide, while eligible Malaysians will receive subsidised diesel at RM2.10 per litre through MyKad verification.
Amir Hamzah said government data showed the monthly allocation would be sufficient for the overwhelming majority of users.
Based on Budi95 consumption data between October 2025 and May 2026, he said fewer than 1% of beneficiaries consistently used more than 200 litres of subsidised fuel each month.
He said the Statistics Department (DOSM) data showed more than 80% of diesel users consumed less than 200 litres monthly, with average usage at around 140 litres.
Recognising that many Malaysians use diesel-powered pick-up trucks and four-wheel-drive vehicles for small businesses and transport in rural areas, he said the government would allow eligible recipients to apply for an additional 100 litres under Budi Madani.
According to DOSM data, about 95% of diesel users consume less than 300 litres a month.
Amir Hamzah said the subsidy reforms were driven by three key factors: soaring fuel subsidy costs following the Middle East conflict, persistent leakages through smuggling and non-citizen consumption and the success of the MyKad-based Budi95 system, which the government is now extending to diesel subsidies.
Fuel subsidies had surged from around RM800mil a month in January and February to almost RM5bil a month in March and April after global crude oil prices climbed above US$120 a barrel.
Earlier this week, Amir said the reforms are expected to generate savings of up to RM2bil annually, enabling the government to reduce the subsidised diesel price for eligible Malaysians to RM2.10 per litre from RM2.15 previously, while ensuring subsidy benefits are reserved exclusively for citizens.
