Petrol dealers fear dry pumps when MCO ends

Station owners may not have the funds to buy enough petrol and diesel to cater to the expected increase in demand after the MCO due to the drop in fuel prices and a 70% reduction in sales.

PETALING JAYA: The country’s largest organisation of petrol station owners has warned of the likelihood of pumps running dry after the movement control order (MCO) expires unless the government temporarily stops the practice of setting weekly prices.

Many of the station owners would not have the funds to buy enough petrol and diesel to cater to the expected increase in demand, Petrol Dealers Association Malaysia (PDAM) president Khairul Annuar Abdul Aziz told FMT.

He said the drop in fuel prices and a 70% reduction in sales since the MCO had badly affected petrol dealers.

Fuel prices fell steeply just before the MCO came into effect and Khairul said many PDAM members had bought their stocks earlier, which means they paid more per litre than the rate at which they have been selling since.

Khairul Annuar Abdul Aziz

Because the MCO had caused poor sales, he added, the stocks had taken a longer time than normal to run out.

“We were essentially giving customers a subsidy of more than 30 sen a litre. Luckily, prices have somewhat stabilised in the past two weeks.”

But, he said, the damage had been done, and petrol stations, which usually require around RM150,000 to RM250,000 on working capital to buy fuel, cannot afford to buy as much now as working capital has depleted.

“My worry is that when the MCO is lifted and people are allowed to travel, there will be a big increase in demand for fuel, a demand that many stations cannot afford to meet,” he said.

“In the worst case scenario, you may see dry pumps in the early days of the post-MCO period or some dealers leaving the industry for good.”

He said dealers were wishing to see prices remaining fixed for some time instead of going up or down every week. “This will be good not just for us but for the entire oil and gas industry.”

Khairul made a distinction between commercial and retail clients in the industry, the former being operators in the transport sector and latter being mostly petrol station owners.

“The biggest clients among commercial buyers are airlines,” he said. “That industry isn’t going to recover so soon. So the entire oil and gas industry will be depending on sales to retailers like petrol dealers.

“If we cannot stay afloat, then it is also not a good thing for the industry.”

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