Thursday, March 10, 2011

Fuel subsidy to rise

Fuel subsidy to rise

KUALA LUMPUR: The fuel subsidy is estimated to rise by an additional RM4bil this year in the face of higher crude oil prices, said the Prime Minister.

The additional RM4bil pushes up the fuel subsidy under Budget 2011 to RM14bil, compared with the RM10bil estimation last year when oil prices hovered around US$85 to US$90 per barrel.

The increase in fuel subsidy would raise the budget deficit – which the Government has targeted for 5.4% of gross domestic product for this year.

Last year, the figure was 5.6%, while the target was to lower the deficit to 2.8% by 2015.

Datuk Seri Najib Tun Razak said yesterday the deficit for this year would depend on how much revenue the Government would get against the increase in subsidy costs.

Late last month Najib said there could be a review of the fuel subsidy should unrest in the Middle East continue although so far there were no plans to do so.

Petrol is priced at RM1.90 per litre for RON 95 and RM2.50 per litre for RON 97.

The price of RON 97 petrol was last raised on Feb 1, up from an initial 10sen increase on Jan 4. In December, RON 95 petrol and diesel rose 5sen per litre to RM1.90 and RM1.85 per litre respectively.

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