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

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.