Petrol dealers seek new fuel price formula

PETALING JAYA: Petrol pump dealers are calling for a new fuel price formula to mitigate the risk of the weekly oil price fluctuation on their businesses.

According to the Malaysian Reserve, they are proposing the dealers guaranteed margin (DGM) mechanism, which is currently being used by one of the country’s largest oil companies.

Petrol Dealers Association of Malaysia (PDAM) president Khairul Annuar Abdul Aziz said the new method would remove the risk of fluctuation from dealers and allow for steadier returns.

“What this mechanism does is, oil companies will compensate the dealers if we have net losses, and vice versa when we gain profit. Over a month, our margin will be as per if there are no price fluctuations.

“This way, oil companies undertake the risk and not the dealers,” Khairul Annuar told The Malaysian Reserve.

The report said the weekly float system had resulted in the closure of more than 300 petrol stations nationwide.

Khairul said under the DGM mechanism, dealers would be guaranteed a profit margin of about 10 sen per litre.

However, not all oil companies are keen on the new system as it will affect their existing retail arrangements.

Retailers claimed that the weekly price mechanism, implemented on March 29 last year, had led to thinning margins due to the spiralling costs of fuel and minimum wage and levy payments for foreign workers.

There are presently some 3,200 petrol stations in the country. Nearly half are owned by Petroliam Nasional Bhd, while the rest are shared among Shell Malaysia Ltd, Petron Malaysia Refining and Marketing Bhd and Boustead Petroleum Marketing Sdn Bhd.

Following a meeting with PDAM last year, Domestic Trade, Cooperatives and Consumerism Minister Hamzah Zainuddin said the government would study a new formula to improve the current weekly mechanism.

However, there has been no update so far. - FMT