PETALING JAYA: What’s good for the consumer is bad for petrol dealers, according to the group representing the latter.
About 30 to 40 petrol stations per brand have ceased operations since the implementation of the monthly price change mechanism in December 2014, The Star reported today.
“This situation is getting worse, more so in recent weeks following the weekly price change mechanism starting April 1.
“We are concerned that more dealers will give up their dealership if the trend continues,” Petrol Dealers Association of Malaysia (PDAM) president Khairul Annuar was quoted as saying.
He attributed this to the fact that there was an imbalance between the stock that is kept by the petrol dealers, and the inability to clear such stock within the seven days.
“Dealers had been selling their fuel stock at a loss as they need more time to clear their stock at the old rates.
“For RON95 petrol, with a stock balance of three to five days on the midnight the weekly price change is announced, dealers will have to sell with zero margin for three to five days of the week.
“A drop of 10 sen will wipe out all margin for petrol sales for three to five days and dealers have to sacrifice all their margin for the government’s weekly ceiling price mechanism,” Khairul told The Star.
He was speaking up following three consecutive weeks of the price of fuel dropping. RON95, which is the highest selling fuel, has dropped 23 sen in the past three weeks, with the last two reductions – April 26 and May 3 – being 10 sen each.
“Carrying weekly stock means a total loss for the dealers if they cannot clear it quickly before the new price is announced.
He estimated that dealers could lose between RM3,000 and RM5,000 per week while some stations only make around RM5,000 net monthly.
Khairul also called the price change mechanism unhealthy, urging the government to limit the changes to no more than five sen at a time in order to “stabilise the market and cushion either gains or losses”.
He said that the commission due to petrol dealers should also be reviewed as overhead costs had increased tremendously since the last revision in 2008.
PDAM represents petrol dealers, including Sabah and Sarawak, where Khairul said there was an impact despite the traffic volume being lower.
“The impact is also felt in areas with too many stations within the same vicinity, such as in Johor Baru and in rural areas where their sale is low and dealers don’t have a petrol mart or convenient store income to subsidise the weekly loss,” Khairul said.