The government will review the fixed quota rates for subsidised diesel under the Subsidised Diesel Control System (SKDS), particularly for goods transport vehicles, in an effort to improve subsidy accuracy and ensure it matches real operational requirements.
Domestic Trade and Cost of Living Minister Datuk Armizan Mohd Ali said the move was agreed during a Cabinet meeting held yesterday, which also reviewed the progress of targeted fuel subsidy mechanisms including Budi Diesel, BUDI95, SKDS and the Subsidised Petrol Control System (SKPS).
He said Prime Minister Datuk Seri Anwar Ibrahim had directed improvements across several areas to better reflect public feedback, cost-of-living pressures, leakage control, as well as the country’s fiscal position and policy space.
Armizan said the enhanced approach, expected to be implemented by August, will see diesel quota calculations move beyond a simple average consumption model based on vehicle type. Instead, more detailed technical factors will be taken into account.
These include gross vehicle weight (BDM), engine capacity, vehicle category, fuel consumption patterns and the actual operational usage of each transport vehicle. He said the government recognises that vehicles within the same category may have significantly different fuel needs.
He added that the previous system applied uniform quotas based mainly on transport classification, but this did not fully reflect differences in load capacity and usage intensity. Larger and heavier vehicles naturally consume more diesel, and this will now be factored into the revised mechanism.
In a broader sense, he noted that the adjustment is aimed at ensuring subsidy distribution is more targeted and better aligned with the operating costs of logistics companies involved in consumer goods transportation. The Domestic Trade Ministry, Transport Ministry and Finance Ministry have been instructed to coordinate immediate implementation measures.
Armizan also announced that the Cabinet has agreed to expand diesel subsidy eligibility to include small traders using diesel-powered vehicles such as pickups and jeeps registered under business or company use codes.
Previously, eligibility under Budi Diesel and SKDS was limited to individually registered vehicles or specific commercial transport categories. The expanded scope is intended to support smaller operators who rely on diesel vehicles for daily business activities.
He said eligible private diesel vehicle owners under Budi Diesel may also apply for an additional 100-litre quota, bringing their total entitlement to 300 litres compared to the basic 200-litre allocation. Applications can be submitted online via the official Budi Madani portal or physically at Inland Revenue Board offices.
Armizan added that IRB offices in Sabah and Sarawak will be open tomorrow to assist applicants seeking the additional quota. He also clarified that the application process is designed to be straightforward, with officers available to assist those applying in person.
He further confirmed that 10 oil companies, including Petronas, Shell, Petron, Caltex, BHPetrol, Five, Smart Stream, Xcel, PETROS and IPTB, have confirmed readiness for the rollout of the Budi Diesel system.
A total of 4,146 petrol stations nationwide are prepared for full implementation of the subsidy mechanism. During the early access phase, eligible users can purchase subsidised diesel at RM2.15 per litre through MyKad verification at participating stations.
Armizan said inspections carried out at petrol stations showed strong readiness in terms of system stability, transaction verification processes, staff training and customer service standards. He added that cooperation between the government and industry players has been key to ensuring smooth implementation.
Under the Budi Diesel framework, eligible Malaysians will eventually be able to purchase subsidised diesel at RM2.10 per litre, either through MyKad verification or approved digital applications.
