KUALA LUMPUR – The federal government had to fork out 416.3%, or RM18.606 billion more, to subsidise the price of RON95 last year, compared to 2021.
Similarly, Putrajaya paid an increase of RM15.766 billion, or 543.5% more, for diesel and an additional RM788.21 million (29.7%) for liquefied petroleum gas (LPG).
In total, the government spent a total of RM23.075 billion to subsidise RON95, RM18.667 billion for diesel, and RM3.44 billion for LPG last year.
According to the Auditor-General’s Year-End Report 2022 on federal expenditure, this jump in expenditure is attributed to the rise in the average price of crude oil, from US$71 per barrel in 2021 to US$100 per barrel.
However, the selling price set by the government has remained unchanged since 2021.
The report also said the subsidy of petroleum products was recorded as the highest and amounted to RM45.184 billion, or 81.5% of the total subsidy expenditure.
Total subsidy expenditure for 2022 was recorded at RM55.443 billion, an increase of RM42.309 billion, or 322.1%, as compared to RM13.134 billion in 2021.
This also resulted in the Finance Ministry having the highest operating expenditure among the ministries, which amounted to RM120.174 billion, or 40.8%, of the federal government’s total operating expenditures in 2022, an increase of RM47.125 billion, or 64.5%, as compared to RM73.049 billion in 2021.
“The significant increase in the ministry’s expenditure was contributed by subsidy expenditure on petroleum products, which amounted to RM45.184 billion, an increase of RM35.161 billion, or 350.8%, as compared to RM10.023 billion in 2021,” the report read.
It added that the subsidy expenditure was for RON 95, diesel, and LPG products supplied by 15 manufacturing companies for claims between December 2021 and October 2022, and that subsidies were paid based on the difference between the sale price set by the government and current market prices.
The income tax on petroleum also recorded a significant hike – an increase of RM11.851 billion, or 102.4%, which amounted to RM23.421 billion – compared to RM11.570 billion in 2021. This was also attributed to higher global crude oil prices in 2022.
As for other subsidy expenditures, the federal government spent RM4 billion last year under the Imbalance Cost Pass-Through mechanism. Of this, a total of RM10.757 billion was claimed by Tenaga Nasional Bhd as part of the subsidy for electricity bills for the period between July and December 2022.
The government also spent a total of RM2.470 billion to subsidise cooking oil, food aid, and additional food, which is an increase of RM1.421 billion (135.5%) compared to 2021.
The cooking oil subsidy had a significant hike, totalling RM2.416 billion compared to RM976.40 million in 2021, due to the jump in palm oil commodity prices.
In 2022, crude palm oil averaged RM5,125.63 per tonne, compared to RM4,417.46 in 2021.
The A-G report also noted that part of the subsidy expenditure for petroleum products and cooking oil, which amounted to RM6.670 billion, was charged to the Covid-19 fund.
Meanwhile, the government also provided a toll compensation of RM861.22 million, a drop from RM1.336 billion spent in 2021.
The compensation subsidy was paid to highway concession companies following the granting of toll discounts and postponement of toll hikes on 19 highways last year, compared to 21 previously.
The subsidy for chicken and chicken eggs introduced on February 5, 2022, cost the government RM2.255 billion, which was paid via Bank Pertanian Malaysia Bhd and Lembaga Pertubuhan Peladang.
This was to alleviate farmers following the rise in costs involving livestock feed, chicks, logistics, workers, utilities, and medication, which exceeded the ceiling prices for chicken and eggs.
All in all, the government spent a total of RM62.113 billion in subsidies for 2022.
The Auditor General’s 2022 Year-End Report was tabled in Parliament earlier today. – October 10, 2023