Sell below govt prices to heat up competition, minister tells petroleum companies

All the 3,500 petrol stations of the six main industry players are now selling their products according to the automatic pricing mechanism.

PUTRAJAYA: Petroleum products can be retailed below prices stipulated by the government to encourage competition among petroleum companies, said Domestic Trade and Consumer Affairs Minister Saifuddin Nasution Ismail.

According to him, all 3,500 petrol stations of the six main industry players are selling petroleum products according to the automatic pricing mechanism (APM), which is RM2.08 per litre for RON95 petrol.

If the companies practise the principle of competition through innovation and efficiency instead of focusing on the business based on petroleum, they could reduce the retail price of petroleum products, he said.

“If it is implemented, we can see petrol stations selling at different prices. For instance, if Shell is selling at RM2.06, Petron RM2.07, then go to BHP which is retailing at RM2.04,” he told reporters after attending a Symposium on Fair Competition and Cost of Living here today.

Saifuddin said petrol station operators can implement this method if it generates a larger volume of sales everyday.

“The petrol retailing business is one of volume, not margin, which means competition among station operators can take place.

“How much to be reduced depends on the operator as they need to make a comparison in terms of costs and quality of service offered,” he said.

Saifuddin said the government had taken into account the importance of petrol station operators by increasing their margin by 2.81 sen per litre to 15 sen per litre for petrol and 3 sen per litre to 10 sen per litre for diesel.

He said the government was also prepared to provide support, including giving certain benefits to petroleum companies working on reducing their prices.