# Malaysia's Fuel Subsidy System: RON95, Diesel and Targeted Rationalisation

> Malaysia is shifting from blanket fuel subsidies to targeted ones — RON95 at RM1.99 per litre through BUDI95, diesel floated since 2024, and eligibility screened through the PADU database. This guide explains the prices, quotas, eligibility and fiscal impact.

- Category: energy
- Language: en
- Status: published
- Updated: 2026-08-14
- Canonical: https://negaraku.md/en/energy/fuel-subsidy-system

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For decades, everyone in Malaysia — millionaire or rubber tapper — paid the same price for petrol at the pump. On 30 September 2025, that arrangement ended. A litre of RON95 can now cost RM1.99 for you but nearly double that for your neighbour, and what decides it is not the world oil price but the identity card you slot into the terminal.

This shift — from *blanket* subsidies (everyone gets them) to *targeted* subsidies (only the eligible get them) — is described by the government as one of Malaysia's biggest fiscal reforms in a generation. This guide explains how it works for RON95 and diesel, who is eligible, and how much money is at stake.

## Why is Malaysia ending blanket fuel subsidies?

According to the government's argument, blanket subsidies were too costly and most of their benefit went to those who needed it least.

According to the Ministry of Finance, the RON95 subsidy alone cost **almost RM20 billion a year** in 2023 and 2024. Because that low price was given to *all* consumers, the government argued that a large share of public money also flowed to high-income earners who drive the most and are most able to pay the full price.

For diesel, the government argued the problem was more acute. The government had spent **RM14.3 billion** on diesel subsidies, and stated that much of it leaked out — not to the people, but to cross-border smuggling and commercial abuse, because Malaysian diesel was far cheaper than in neighbouring countries.

The reform logic the government put forward is simple: float prices to market levels, then channel subsidies *only* to eligible citizens. The money saved can be redirected to cash aid and the social safety net.

## What is BUDI95, and who is eligible for RM1.99 RON95?

BUDI95 (under the BUDI MADANI brand) is the targeted subsidy programme for RON95 petrol. It introduces **two-tier pricing**:

- **RM1.99 per litre** for eligible Malaysian citizens.
- **The unsubsidised price** for those who are ineligible, foreigners, or after the monthly quota runs out. This price is set weekly through the APM — at the start of BUDI95 (late September 2025) it was RM2.60 per litre, but by the week of 6–12 August 2026 it had risen to **RM3.77 per litre**.

With the unsubsidised price at RM3.77 per litre, the effective subsidy is **about RM1.78 per litre** (week of 6–12 August 2026). RON97 remained at **RM3.21 per litre** when BUDI95 began (the RON97 price has never been subsidised and floats fully with the market — it was RM4.35 per litre in the week of 6–12 August 2026).

Who is eligible? According to the Ministry of Finance and operators such as Petron, the conditions are:

- A **Malaysian citizen** holding a **MyKad** with an active chip.
- Holding a valid **driving licence** for an approved class.
- **Not** in the **T15** group — the top 15% of households by income, who are excluded.

Prime Minister Anwar Ibrahim described the target group as roughly 18 million car drivers and motorcyclists, including youths aged 16 and above and gig workers. As of 30 November 2025, **13.9 million citizens** — about **84% of the 16.5 million** eligible — had benefited, with sales reaching **RM5.16 billion** and consumption of **2.59 billion litres**.

## How do MyKad, the quota and PADU work together?

Three moving parts operate at once every time you fill up: identity verification, a quota check, and the database behind the scenes.

**PADU** (Pangkalan Data Utama, the Central Database) is the brain of the system. It combines data from the Inland Revenue Board (LHDN), the Road Transport Department (JPJ) and the National Registration Department (JPN) to determine whether a person is outside the T15 group. The eligibility list is updated periodically so that no eligible citizen is left out.

**MyKad** is the key at the pump. You verify eligibility through one of several methods:

- Inserting the MyKad into a **card reader terminal** at the station.
- Using an **oil-company app** such as Setel (Petronas) or the Shell app.
- **Touch 'n Go eWallet** or an Outdoor Payment Terminal (OPT).
- **Cash payment at the counter** — provided specifically for those without an e-wallet or internet access.

**The quota** limits abuse. Each eligible individual gets **200 litres a month** at the subsidised price — reduced from 300 litres from **1 April 2026**, while the price is kept at RM1.99. From **1 July 2026**, that 200-litre quota is **shared** between subsidised RON95 (RM1.99) and Budi Diesel (RM2.10) — both drawing from the same balance. If the quota runs out, further purchases are charged at the unsubsidised price. E-hailing and p-hailing drivers keep a higher ceiling of **800 litres a month** because of their work needs.

Here is a summary of RON95 prices and benefits:

| Item | Value |
|---|---|
| Subsidised RON95 (eligible citizen) | RM1.99 / litre |
| Unsubsidised RON95 (week of 6–12 August 2026) | RM3.77 / litre |
| Effective subsidy (week of 6–12 August 2026) | ~RM1.78 / litre |
| Monthly quota (from 1 April 2026) | 200 litres |
| RON97 (when BUDI95 began) | RM3.21 / litre |
| RON95 for land public transport | RM2.05 / litre |
| Effective | 30 September 2025 |

*Source: Ministry of Finance Malaysia; Petron Malaysia; Paul Tan's Automotive News. The unsubsidised price is set weekly through the APM.*

## How is diesel rationalised — and what changed in 2026?

Diesel led RON95 by more than a year, and its story teaches us how this reform has evolved.

On **10 June 2024**, the government floated the diesel price in Peninsular Malaysia. The retail price jumped to **RM3.35 per litre** at the time — in line with the market — from its previous subsidised level, and has changed weekly since (reaching about RM4.57 per litre in the week of 6–12 August 2026). Sabah, Sarawak and Labuan were **exempted** and kept at **RM2.15 per litre**.

To protect those who genuinely need it, the government maintained targeted subsidies:

- **Logistics** through the **SKDS 2.0** fleet card (Subsidised Diesel Control System): RM2.15 per litre.
- **Public transport** (buses, ambulances, fire engines): RM1.88 per litre.
- **Fishermen**: RM1.65 per litre.

Individuals, meanwhile, initially received **cash aid** — under **BUDI Individu** (diesel-vehicle owners) and **BUDI Agri-Komoditi** (smallholders), which was later raised to RM400 a month.

As of **30 September 2025** (a snapshot indicator), the Ministry of Finance reported over **140,000** BUDI Individu recipients (RM430 million), **180,000** BUDI Agri-Komoditi recipients (RM350 million), and **121,618** companies with **355,074** vehicles approved for fleet cards. From **1 July 2026**, the BUDI Individu and BUDI Agri-Komoditi cash-aid schemes were absorbed into the Budi Diesel subsidy at the pump, with existing recipients transferred automatically.

From **1 July 2026**, the **Budi Diesel** programme allows eligible private diesel-vehicle owners to buy diesel at **RM2.10 per litre** — about **700,000** vehicle owners (400,000 in the Peninsula; 300,000 in Sabah, Sarawak and Labuan). Eligibility is verified through MyKad and the JPJ database. The basic monthly quota is **200 litres shared** with subsidised BUDI95 RON95; owners of pickups and SUVs who meet the criteria may apply for an additional 100 litres (300 litres in total). Subsidised diesel applies only to **B10 and above** blends; B7 remains unsubsidised at the weekly market rate.

| Diesel category | Price / litre |
|---|---|
| Unsubsidised diesel, Peninsula (floating, week of 6–12 August 2026) | RM4.57 |
| Budi Diesel individual (from 1 July 2026) | RM2.10 |
| SKDS 2.0 (logistics/commercial) | RM2.15 |
| Sabah/Sarawak/Labuan | RM2.15 |
| Public transport | RM1.88 |
| Fishermen | RM1.65 |

*Source: Ministry of Finance Malaysia; Paul Tan's Automotive News; BERNAMA. Floating prices are set weekly through the APM.*

## How much does the government save, and where does the money go?

This is the real stake of the reform.

For **diesel**, the Ministry of Finance estimates savings of **about RM5 billion a year** since 10 June 2024 — the result of closing smuggling leaks and targeting the subsidy.

For **RON95**, Deputy Finance Minister Lim Hui Ying stated the government is expected to save **RM2.5 billion to RM4 billion a year**, depending on the global crude oil price between **US$60 and US$80 a barrel**. (Full assessment begins in 2026 because BUDI95 was only launched at the end of September 2025.)

The government states that the money saved is redirected — not lost. According to the government, fuel-subsidy savings are channelled to direct cash aid such as Sumbangan Tunai Rahmah (STR) and Sumbangan Asas Rahmah (SARA) for low-income households. According to the Ministry of Finance, the combined STR and SARA allocation for 2026 totals **RM15 billion** — the highest allocation to date — benefiting about **9 million recipients** (SARA reaches over 8 million people including 400,000 hardcore poor registered with eKasih, while STR Phase 1 covers 3.7 million households plus 1.3 million single senior citizens).

## Comparison: blanket versus targeted subsidies

| Feature | Blanket subsidy (old) | Targeted subsidy (BUDI MADANI) |
|---|---|---|
| Who gets it | All consumers, including the wealthy and foreigners | Eligible citizens only; T15 excluded |
| How it is delivered | Pump price suppressed for everyone | Two-tier pricing + quota through MyKad/PADU |
| Leakage | High — smuggling, abuse (per the government) | Reduced through identity verification |
| RON95 cost | ~RM20 billion a year (2023–2024) | Saves ~RM2.5–4 billion a year (projection) |
| Diesel cost | RM14.3 billion (before) | Saves ~RM5 billion a year |
| Fiscal flexibility | Low | Money redirected to cash aid (STR/SARA RM15 billion, 2026) |

*Source: Ministry of Finance Malaysia; Malay Mail; Sinar Harian.*

## Are you eligible — and what do you need to do?

Use this simple framework for RON95:

1. **Are you a Malaysian citizen with an active-chip MyKad?** If not — you pay the unsubsidised price (RM3.77 per litre in the week of 6–12 August 2026).
2. **Do you hold a valid driving licence?** This is a basic eligibility condition announced by the government.
3. **Are you in the T15 group (the top 15% of earners)?** If yes — you are excluded from the subsidy.
4. **If you pass 1–3:** you are eligible for 200 litres of RON95 at RM1.99 each month. No special registration is required for most people — simply verify your eligibility at the pump using MyKad or an app.
5. **If you are an e-hailing/p-hailing driver or a diesel-vehicle owner:** check the BUDI MADANI portal for additional quota or dedicated programmes (for example, Budi Diesel for private diesel vehicles).

For private diesel, the additional condition is that you must **personally own** a registered diesel vehicle with valid road tax — ownership is verified through the JPJ database.

## Common mistakes to avoid

- **Thinking you need to "register" for RON95.** For the majority of citizens, eligibility is verified automatically through PADU and MyKad at the pump — not through a separate form.
- **Confusing the diesel and RON95 prices.** They are two different programmes with their own dates, prices and mechanisms. RON95 = RM1.99 (BUDI95); private diesel = RM2.10 (Budi Diesel, from July 2026).
- **Forgetting the quota limit.** Purchases above 200 litres a month (RON95, from 1 April 2026) are charged the full price; from 1 July 2026 that 200-litre quota is shared with Budi Diesel. There is also a per-transaction limit (for example, RM250 as stated by operators).
- **Assuming prices are fixed.** The *unsubsidised* price is set by the Ministry of Finance through the Automatic Pricing Mechanism (APM) and changes every week; only the subsidised RM1.99 price is stable.
- **Assuming Sabah/Sarawak are the same as the Peninsula for diesel.** Diesel in Sabah, Sarawak and Labuan is not floated and stays at RM2.15 per litre.
- **Buying RON97 expecting a subsidy.** RON97 has never been subsidised and stays at the market rate (RM3.21 per litre when BUDI95 began; RM4.35 per litre in the week of 6–12 August 2026).

## What's next

Malaysia's fuel subsidy system is still evolving. A few things worth watching:

- **The full 2026 assessment.** The government will calculate the actual full-year RON95 savings for the first time, which will determine whether the RM2.5–4 billion estimate is met.
- **The expansion of Budi Diesel.** The private diesel programme that began in July 2026 marks a shift from cash aid to a MyKad-based subsidy at the pump — a pattern that may be refined further.
- **PADU's accuracy.** The fairness of the whole system depends on the accuracy of income data. Watch how the government handles appeals and misclassified cases.
- **Global oil prices.** Because the *unsubsidised* price follows the market, a rise in world oil prices widens the gap between RM1.99 and the full price — making the quota more important.

For official and up-to-date information, refer to the BUDI MADANI portal and the Ministry of Finance's press releases. The figures in this guide are accurate as of the update date; fuel prices and programme details may change.

## Sources

- Non-Subsidised RON95 Retail Price Set At RM2.60 Per Litre As BUDI95 Commences — https://www.mof.gov.my/portal/en/news/press-release/non-subsidised-ron95-retail-price-set-at-rm2-60-per-litre-as-budi95-commences (Kementerian Kewangan Malaysia (MOF))
- Details Of Targeted RON95 Subsidy Out By Sept-End — Amir Hamzah — https://www.mof.gov.my/portal/en/news/press-citations/details-of-targeted-ron95-subsidy-out-by-sept-end-amir-hamzah (Kementerian Kewangan Malaysia (MOF))
- RON95 Price Lowered To RM1.99 Per Litre After Targeted Subsidy, People Will Not Be Affected — PM Anwar — https://www.mof.gov.my/portal/en/news/press-citations/ron95-price-lowered-to-rm1-99-per-litre-after-targeted-subsidy-people-will-not-be-affected-pm-anwar (Kementerian Kewangan Malaysia (MOF))
- Government Implements Targeted Diesel Subsidy For Peninsular Malaysia Effective 10 June 2024 — https://www.mof.gov.my/portal/en/news/press-release/government-implements-targeted-diesel-subsidy-for-peninsular-malaysia-effective-10-june-2024 (Kementerian Kewangan Malaysia (MOF))
- Govt Saves RM5 Bln Through Diesel Subsidy Rationalisation — MoF — https://www.mof.gov.my/portal/en/news/press-citations/govt-saves-rm5-bln-through-diesel-subsidy-rationalisation---mof (Kementerian Kewangan Malaysia (MOF))
- BUDI Diesel Starts Tomorrow, 700,000 Vehicle Owners To Pay RM2.10 A Litre — https://www.mof.gov.my/portal/en/news/press-citations/budi-diesel-starts-tomorrow-700-000-vehicle-owners-to-pay-rm2-10-a-litre (Kementerian Kewangan Malaysia (MOF))
- Over 11 million benefited from BUDI95 fuel subsidy, says MoF — https://www.malaymail.com/news/malaysia/2025/10/15/over-11-million-benefited-from-budi95-fuel-subsidy-says-mof/194613 (Malay Mail)
- Deputy Finance Minister: BUDI95 records RM5.16b in sales, government projects up to RM4b in savings — https://malaymail.com/news/malaysia/2025/12/02/deputy-finance-minister-budi95-records-rm516b-in-sales-government-projects-up-to-rm4b-in-savings/200472 (Malay Mail)
- FAQ — BUDI MADANI RON95 — https://budi95.mypetron.com/ (Petron Malaysia)
- Budi Diesel — frequently asked questions (FAQ) — https://paultan.org/2026/06/23/budi-diesel-frequently-asked-questions/ (Paul Tan's Automotive News)
- Govt in final stages of fine-tuning RON95 fuel subsidy criteria and delivery mechanism — PADU, MyKad, quota — https://paultan.org/2025/08/26/govt-in-final-stages-of-fine-tuning-ron95-fuel-subsidy-criteria-and-delivery-mechanism-padu-mykad-quota/ (Paul Tan's Automotive News)
- Sumbangan Tunai Rahmah (STR) Fasa 1 Tahun 2026 Disalurkan Mulai 20 Januari 2026 — https://mof.gov.my/portal/ms/berita/siaran-media/sumbangan-tunai-rahmah-str-fasa-1-tahun-2026-disalurkan-mulai-20-januari-2026 (Kementerian Kewangan Malaysia (MOF))
- SARA dan STR 2026 libat sembilan juta penerima, peruntukan tertinggi RM15 bilion - PMO — https://www.sinarharian.com.my/article/764348/berita/nasional/sara-dan-str-2026-libat-sembilan-juta-penerima-peruntukan-tertinggi-rm15-bilion---pmo (Sinar Harian)
- Malaysian fuel prices July 30-August 5, 2026 - up 20 sen; diesel to RM4.62, RON95 to RM3.82, RON97 to RM4.40 — https://paultan.org/2026/07/29/malaysian-fuel-prices-july-30-august-5-2026-up-20-sen-diesel-to-rm4-62-ron95-to-rm3-82-ron97-to-rm4-40/ (Paul Tan's Automotive News)
- RON97, RON95, And Diesel Retail Prices — MOF weekly retail price releases — https://mof.gov.my/portal/en/news/press-release/retail-price/ron97-ron95-and-diesel-retail-prices-raised-by-5-sen-per-litre-from-26-february-2026-to-4-march-2026 (Kementerian Kewangan Malaysia (MOF))
- BUDI Diesel Bermula 1 Julai 2026, Rakyat Bayar RM2.10 Seliter — https://mof.gov.my/portal/ms/berita/siaran-media/budi-diesel-bermula-1julai-2026-30062026 (Kementerian Kewangan Malaysia (MOF))
- Budi Diesel begins - 700,000 vehicle owners expected to benefit from RM2.10 per litre subsidised diesel — https://paultan.org/2026/07/01/budi-diesel-begins-700000-vehicle-owners-expected-to-benefit-from-rm2-10-per-litre-subsidised-diesel/ (Paul Tan's Automotive News)
- BUDI Diesel Starts Tomorrow, 700,000 Vehicle Owners To Pay RM2.10 A Litre — https://www.bernama.com/en/general/news.php?id=2575096 (BERNAMA)
- Harga Dan Kaedah Subsidi Diesel Diseragamkan di Seluruh Negara Mulai 1 Julai 2026 — https://mof.gov.my/portal/ms/berita/siaran-media/budi-madani-diesel-22062026 (Kementerian Kewangan Malaysia (MOF))
- Insentif BUDI Diesel, BUDI Agri-Komoditi naik RM400, tambah sokongan kepada pesawah — https://berita.rtm.gov.my/nasional/senarai-berita-nasional/senarai-artikel/insentif-budi-diesel-budi-agri-komoditi-naik-rm400-tambah-sokongan-kepada-pesawah/ (Portal Berita RTM)
- BUDI95 Diselaras Kepada 200 Liter Sebulan, Harga Kekal RM1.99 Seliter — https://mof.gov.my/portal/ms/berita/siaran-media/budi95-diselaras-kepada-200-liter-sebulan-harga-kekal-rm1-99-seliter (Kementerian Kewangan Malaysia (MOF))
- Kuota BUDI95 Diselaraskan Sementara Kepada 200 Liter Sebulan Mulai 1 April Ini — https://www.bernama.com/bm/news.php?id=2537929 (BERNAMA)

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