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Petrol dealers in a tight spot

SHAH ALAM – Petrol dealers say they have to resort to severe cost-cutting measures 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 this includes letting go of employees as the minimum wage increase will also kick in that day and cutting stations open hours to 18 hours instead of 24 hours.

He said PDAM was against the weekly pricing mechanism as dealers would be exposed to the risks of oil price fluctuations.

“We are not against the price drop but the quantum is very big. As we don’t control our own stock, if prices go down we are left with more stock at midnight. Even if prices go up, the gain is not a lot,” said Khairul Annuar.

He said dealers had lost RM61mil in December 2014 and another RM30mil in March 2017 when the monthly and then weekly floats were introduced respectively.

“The current disparity is RM0.30 per litre for RON 95, which means an estimated Rm42mil on Jan 1,” he said.

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 are 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 we have to deduct for oil licence fees to the oil companies, merchant discount rate for credit card payers, workers’ wages and utilities, and insurance and council fees,” he said.

Perak Petrol Dealers Association chairman Kenneth Lee said the price mechanism changes had already caused many petrol dealers to quit the industry and more were expected to surrender their licences once the weekly float comes into effect next week.

“About 50 petrol dealers quit in 2017 and these are just the ones we know about, while some sold or transferred their business to others as they couldn’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 if there were no options left.

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 today.

Melaka dealer David Wu said even if the price drop was minimum, 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.

Source: The Star