Petrol dealers to undergo severe cost-cutting if govt persists with weekly pricing mechanism

  • Nation
  • Saturday, 29 Dec 2018

February CPI was also affected by the drop in the transport group as fuel prices slipped.

SHAH ALAM: Petrol dealers say they might have no choice but to resort to severe cost-cutting measures to stay afloat if the government persists with its weekly fuel price float, which goes into effect on Jan 1.

Petrol Dealers Association of Malaysia (PDAM) president Datuk Khairul Annuar Abdul Aziz said these would include letting go of employees as the minimum wage had increased to RM1,100, as well as limiting daily operating hours from 24 hours to 18 hours.

Khairul Annuar explained that PDAM was against the weekly pricing mechanism, as dealers were totally exposed to the risks of oil price fluctuations.

"We are not against the price drop, but the quantum is very big, and moreover, we don't control our own stock ordering and fuel product pricing, so if prices goes down, we are left with more stock at midnight, but even if prices go up, the gain is not a lot," said Khairul after a special meeting organised by the Petrol Dealers Association of Malaysia (PDAM).

Khairul Annuar said dealers had suffered huge losses when there were changes in the price mechanism, RM61mil in Dec 2014 and RM30mil when the monthly, then weekly floats were introduced, resulting in large disparities in fuel prices.

PDAM also wants the government to increase the commission for dealers from RM0.12 to RM0.15 per litre for both diesel and petrol, especially now that diesel prices were almost on par with RON95.

"To be honest, even with RM0.12 per litre for commission, this is not really the sum we are getting as you still have to deduct for oil licence fees to the oil companies, merchant discount rate for credit card payers, workers' wages and utilities, insurance and council fees," he said.

The price fluctuations from the price mechanism changes had already caused many petrol dealers to quit the industry, and more were expected to surrender their licences once the new prices come into effect next week, said Perak Petrol Dealers Association Chairman Kenneth Lee.

"The number of petrol dealers who surrendered their licences since 2014 has been rising exponentially since 2014, when they started implementing the monthly and weekly price floats.

"About 50 petrol dealers quit in 2017, and those are just the ones we know, some just sell or transfer their business to others, they can't survive," Lee said.

PDAM's management committee said besides the cost cutting measures, they would march to the Domestic Trade and Consumer Affairs Ministry as a last resort.

The PDAM plans to hand a petition to Prime Minister Tun Dr Mahathir Mohamad containing the industry's grievances and recommendations at Parti Pribumi Bersatu Malaysia's annual general meeting on Dec 30.

Melaka dealer David Wu, who made the trip to attend the special meeting, told The Star that even if the price drop was minimised, this was akin to "death by a thousand cuts" and postponing inevitable losses.

"It might be better to set up a fund to stabilise the country's oil prices, rather than trying to change oil prices weekly, because hawkers and other businesses are not reducing their prices even when oil prices go down each week," Wu said.

Finance Minister Lim Guan Eng said that a weekly float system will be used to determine fuel price for RON95 from Jan 1 onwards due to the falling prices of crude oil.


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