Petrol Station Operators Hit Hard By Weekly Fuel Prices

Petrol station operators are finding it hard to cope with the weekly fluctuating retail fuel prices, and many of them are giving up their operations.

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

“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.

All kiosk operators were affected by the weekly swing in retail fuel prices, including those in Sabah and Sarawak where the traffic volume was lower, Khairul added, representing the excos of Shell, Petronas, BHP, Caltex and Petron in PDAM.

“This is especially in areas with too many stations within the same vicinity, such as in Johor Bahru 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.

Many of the dealers were forced to retrench their workers to trim their monthly overhead costs.

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

To reduce cost, operators will move towards full self-service, and as a result 14,000 people will lsoe their jobs.

A survey, conducted by PDAM with 840 petrol stations, found that only 21% of the workers employed are foreign workers, with the remaining 79% being local, Khairul revealed.

“Our survey shows that we have around 40% foreign workers only in urban areas,” he said, adding that dealers 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 a bigger issue 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.

An estimate given by PDAM said that dealers could lose between RM3,000 and RM5,000 per week while some stations only make around RM5,000 net monthly.

With the “unhealthy” price swings, 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.

The authorities should also review the commission for the dealers to make up for the rise in overhead costs. The commission was last revised 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.


Image from Petron.

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