Petrol station operators hit by weekly swing in fuel prices

PETALING JAYA: Many petrol station operators are giving up their operations as they can no longer cope with the weekly swing in retail fuel prices.

Petrol Dealers Association of Malaysia (PDAM) President Datuk Khairul Annuar said since the implementation of the monthly price change mechanism in December 2014, between 30 to 40 stations per brand had surrendered their operations.

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, he told The Star yesterday.

Representing the excos of Shell, Petronas, BHP, Caltex and Petron in PDAM, Khairul said kiosk operators nationwide were affected including in Sabah and Sarawak where traffic volume was lower.

This is especially 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, he said.

To cushion their losses, dealers may have to retrench workers to cut monthly overhead expenses.

If cost continues to be an issue, 14,000 people will lose their jobs as we will go for full self-service, he said.

There are a total of 3,500 petrol stations nationwide with a workforce of 50,000, of which 14,000 are forecourt staff (pump attendants).

In a nationwide survey conducted by the body at 840 petrol stations, it was found that only 21% are foreign workers while the rest are locals, contrary to popular belief, said Khairul.

Our survey shows that we have around 40% foreign workers only in urban areas, he added.

Dealers, he said, had been selling their fuel stock at a loss due to the drop in the ceiling price.

Carrying weekly stock means a total loss for the dealers if they cannot clear it quickly before the new price is announced.

This is especially the case for RON97 and diesel where the sale is low but the stock is high, said Khairul.

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.

Dealers, he said, needed more time to clear their stock at the old rates.

PDAM estimated that dealers could lose between RM3,000 and RM5,000 per week while some stations only make around RM5,000 net monthly.

Calling the price change unhealthy, petrol dealers are hoping for a limit of no more than a 5 sen price change from the week before to stabilise the market and cushion either gains or losses.

Khairul said that the commission due to petrol dealers should also be reviewed as overhead costs had increased tremendously since the last revision in 2008.

Diesel typically sells less compared to petrol but stock is high and gross margin is only 7 sen.

Therefore, a drop of 10 sen hits us hard and this gives more reason to review the margin for all petroleum products, said Khairul.

Source: Malaysian Trades Union Congress