PETROL station operators will continue discussing with the government to find ways on reducing the effects of the new retail oil price mechanism on them, said its representative Khairul Annuar Abdul Aziz.

Khairul said discussions between Petrol Dealers Association of Malaysia (PDAM) with the Finance Ministry today did not reach a conclusion and it will resume next with the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP).

“There were a lot of things we agreed on just now, but without the presence of the minister, the ministry’s officer cannot give any commitments. The discussion is still ongoing.

“Finance Ministry will have a discussion with KPDNHEP and KPDNHEP will call us after that. Maybe in two or three days,” he told The Malaysian Insight.

On Monday, Finance Minister Lim Guan Eng announced that the government will standardise retail price of petroleum products, including RON95, to a lower price starting January 1.

PDAM had previously suggested the dealers guaranteed margin (DGM) mechanism be implemented where if fuel prices drop after the petrol station had placed an order, the petrol company will pay a replacement fee to the petrol station.

This means the petrol station will get a compensation from the oil company if they face losses.

However, if the price increases after the station had placed an order, the station will pay a replacement fee to the company.

With DGM, the profit margin for petrol station remains at RM0.10 per litre, even if the global price for crude oil either increases or decreases.

After the re-standardisation of retail price for petroleum products, RON95 is expected to be set at RM1.90 instead of it’s current rate which stands at RM2.20.

This caused unhappiness among petrol station dealers as they will face a loss of RM0.20 per litre.

The Bumiputera Petrol Dealers Associations of Malaysia (BUMIPEDA) president, Abu Samah Bachik had earlier expected that consumers may face a problem obtaining petrol and diesel as the stock at all petrol stations may deplete ahead of January 1.

Abu Samah said the depletion of petrol and diesel is due to the refusal by petrol station operators to add supply towards year end.

“Of course we do not want to add supply at year end with an expensive price, but sell it according to a lower rate which is effective January 1.

“Previously the government used a monthly float system, we can still operate by making profit to bear the operational cost.

“However, the government’s decision to reuse the weekly float system effective on January 1 might cause losses to dealers,” he said. – December 26, 2018.