Petrol station dealers nationwide are looking into cutting down its operations from 24-hours to 18-hours, as part of their cost-cutting measures following the government’s move to weekly fuel price float effective Jan 1.
Reported in The Star, it seems that cutting operation time is just one of the two measures taken by dealers, with others looking into letting go of employees due to the minimum wage increase.
According to the Petrol Dealers Association of Malaysia (PDAM) President Datuk Khairul Annuar Abdul Aziz, the move was due to the fact that petrol dealers will be exposed to the risk 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.”
He recalled the previous move of introducing monthly and weekly floats which lead dealers to lose RM61 million in December 2014 and another RM30 million in March 2017.
PDAM has also urged the government to increase commission for dealers – from RM0.12 to RM0.15 per litre for diesel and petrol.
Citing that the price of diesel and RON95 are almost on par, Khairul said,
“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.”
Meanwhile, Perak Petrol Dealers Association Chairman Kenneth Lee foresees that the changes in price mechanism will result in more dealers leaving the industry.
“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.”
Melaka Dealer David Wu pointed out that it would be better if a fund was set up to stabilise oil prices rather than impose weekly changes.
“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.”
Is the move to cut operation time and lessen the number of employees a sound move by dealers? Share with us your take on the matter in our comments section.