Sabah Rural Diesel Subsidy Quota Proposed to Rise to 500 Litres Monthly

KUALA LUMPUR, JULY 2026 – The federal government has been urged to increase the monthly subsidised diesel quota for motorists in rural Sabah from 200 litres to 500 litres to reflect the longer distances and challenging travel conditions faced by communities in the state’s interior.

Kuamut assemblyman Datuk Masiung Banah raised the proposal during the Sabah State Legislative Assembly’s debate on the winding-up of the 2026 Supplementary Supply Expenditure Motion. He said the existing allocation was insufficient for residents and elected representatives who frequently travel for several hours to reach major towns and access essential services.

Masiung, who represents Gabungan Rakyat Sabah, cited the journey between Kuamut and Kota Kinabalu as an example. According to him, a return trip can take between six and seven hours, with the current 200-litre monthly allocation potentially consumed by a single journey.

He argued that the targeted diesel subsidy system should account for the major differences between urban and rural areas, particularly in terms of distance, road conditions, terrain and geographical size.

While acknowledging the federal government’s responsibility to restructure subsidies and reduce leakages, Masiung said the specific requirements of Sabah’s rural communities should receive greater consideration during the programme’s implementation.

He also called on the Sabah government’s committee overseeing diesel and petrol subsidies to take note of the request and formally propose the higher quota to the federal government.

The proposal seeks to raise the basic monthly allocation by 300 litres for eligible rural users. However, no decision or approval for the increase had been announced when the request was presented to the state assembly.

BUDI MADANI Diesel, commonly known as BUDI Diesel, was implemented nationwide on July 1, 2026. Under the programme, eligible Malaysian owners of private diesel vehicles can purchase subsidised fuel at RM2.10 per litre using MyKad verification at participating petrol stations.

The standard subsidised allocation is 200 litres per month. Eligible owners of diesel-powered pickup trucks and jeeps may apply for an additional 100 litres, bringing their total monthly entitlement to as much as 300 litres.

The Finance Ministry said the additional allowance for pickups and jeeps was introduced partly because such vehicles are widely used for small businesses, family responsibilities and travel into rural and remote areas.

By July 4, nearly 200,000 eligible pickup and jeep owners nationwide had been approved for the additional 100-litre allocation. More than 22,000 of those beneficiaries were based in Sabah, Sarawak and the Federal Territory of Labuan.

The nationwide subsidy programme is expected to benefit approximately 700,000 private diesel-vehicle owners, including about 300,000 in Sabah, Sarawak and Labuan. Around 70,000 eligible commercial and goods-transport vehicles in the three territories may also purchase subsidised diesel through the Subsidised Diesel Control System.

The government previously said nearly 90 per cent of Malaysian motorists use less than 200 litres of fuel per month. However, Masiung’s proposal suggests that a uniform national limit may not adequately reflect the realities of communities separated from administrative centres, hospitals, schools and commercial areas by long travel distances.

Residents in Sabah’s interior often depend on private vehicles because public transportation options are limited and essential services may be located far from their villages. Pickup trucks and four-wheel-drive vehicles are also commonly used because some routes involve uneven roads and difficult terrain.

A higher allocation could reduce transportation costs for eligible rural motorists, but it would also require the authorities to establish clear eligibility criteria to ensure the additional subsidy reaches genuine users in remote areas.

The proposal places attention on whether targeted subsidy programmes should apply different monthly limits according to location, vehicle function and actual transportation requirements rather than relying solely on a standard national allocation.