KUALA LUMPUR, Sept 3 — Five months after reducing the monthly subsidised RON95 quota from 300 litres to 200 litres, the government has restored the higher limit.

The basic monthly eligibility limit under the BUDI Madani RON95 (BUDI95) programme was raised back to 300 litres effective from September 1, with 16 million users enjoying RON95 at the subsidised price of RM1.99 a litre. 

According to the Finance Ministry, the restoration took into account more orderly fuel-supply management, stronger enforcement, Malaysia’s strong economic performance and the government’s financial capacity.

It also cited the needs of Malaysians who travel long distances for their daily activities and small traders who depend on vehicles to earn a living.

But with government data showing average monthly RON95 consumption is around 100 litres, what does the restored litres mean for current consumers?

What does the 300-litre quota actually mean?

The 300 litres is a monthly eligibility ceiling for subsidised RON95, it is not a monthly allocation of free petrol.

A motorist who uses 100 litres a month will still purchase only 100 litres.

The higher ceiling means eligible Budi95 users may purchase up to 300 litres of RON95 at RM1.99 a litre, subject to the programme’s eligibility requirements.

The Finance Ministry said the basic monthly BUDI Madani eligibility limit was increased automatically from 200 litres in August to 300 litres from September 1. 

For example, a motorist using 250 litres a month can now have all 250 litres within the subsidised ceiling.

Who will benefit from the change?

The restoration is most relevant to motorists with higher monthly fuel consumption.

Specifically, Malaysians who need to travel long distances for daily activities and small traders who depend on vehicles to earn a living.

For motorists who use less than 200 litres a month, the immediate difference is limited because their normal consumption was already within the previous ceiling.

In Parliament, the government said average monthly RON95 consumption was around 100 litres. 

It also said 90 per cent of Malaysians use no more than 200 litres a month. 

This means the higher ceiling is most relevant to the smaller group of users with higher monthly fuel consumption.

Does restoring the quota mean the subsidy bill will rise sharply?

Not necessarily.

Raising the ceiling by 100 litres does not mean every BUDI95 user will consume an additional 100 litres, its actual fiscal impact depends on how much additional subsidised fuel is purchased.

The government has previously said the 200-litre limit was sufficient for 90 per cent of Budi95 users, while the cost depended on the subsidy borne by the government on each litre.

For August 27 to September 2, the Finance Ministry set unsubsidised RON95 at RM3.82 a litre, while the subsidised BUDI95 price remained at RM1.99 a litre — bearing a subsidy of RM1.83 a litre for eligible Budi95 consumers.

This means a calculation based simply on the number of users multiplied by 100 additional litres would not represent the government’s actual additional subsidy cost.

The actual cost depends on how much additional fuel is purchased and the prevailing subsidy per litre.

What does it mean for everyday consumption?

For most motorists, the change may have little immediate effect because their monthly consumption is already below 200 litres.

The difference becomes more significant for motorists who regularly exceed that level.

For example, a motorist using 250 litres a month would have 50 litres beyond a 200-litre ceiling.

Using the government’s RM1.83-per-litre subsidy figure for August 27 to September 2 as an illustration, those 50 litres represent a difference of RM91.50.

That is a calculation based on the government’s published prices, rather than an official estimate of how much an individual motorist will save. 

The actual difference would change if the unsubsidised RON95 price changes.

What should motorists watch next?

The fiscal cost of subsidising RON95 will continue to depend on fuel consumption and the market cost of the fuel, while unsubsidised prices may change from week to week, meaning the subsidy borne by the government could also change.

For motorists, the immediate change is straightforward: the basic monthly Budi95 eligibility ceiling is once again 300 litres from September 1.

As for the government, the fiscal impact will depend on how much of that additional ceiling is actually used.