PETROL station operators have urged the government to allow them to close their business as the high operating costs and low revenue in the past four weeks of the movement-control order (MCO) are driving them to bankruptcy.

The Bumiputera Petrol Dealers’ Association told The Malaysian Insight that if some of them are not given the option to suspend operations during the MCO, they will soon be bankrupt.

Their struggles are due to a combination of low global oil prices, steep operating costs and a plunge in revenue ever since the government directive was enforced on March 18 to break the spread of Covid-19, which has so far claimed 86 lives and infected 5,251.

Association president Abu Samah Bachik said dealers across the country are losing between RM5,000 and RM6,000 a week during the MCO, or collectively between RM40,000 and RM100,000 over the past four weeks.

Some 3,000 of the 3,700 petrol stations nationwide are members of the association.

“When we don’t make sales, we lose money, but when we open our stations to sell, we lose even more money,” said Abu Samah.

“We lost money when we bought petrol at a higher price than we are allowed to sell now,” he said, explaining how stations are being squeezed.

“For instance, during the week before the MCO, a dealer would have bought 10,000l of RON95 petrol at the average price of RM1.80 a litre. The following week, the price fell to RM1.70 a litre.

“But when we open our stations to sell petrol, we lose even more money. We lose money because we sell the fuel at a loss, and we lose money from the costs, like electricity and staff salaries.

“Even when we open, we are unable to make enough revenue to cover our costs because the majority of the population cannot travel,” he said, referring to the MCO’s 10km travel limit for the majority of citizens.

Ruthless oil companies

Due to this, said Abu Samah, the association is asking the government to allow stations to cease operations during the MCO so that operators can save money.

By law, petrol stations are forbidden from closing without approval from the Domestic Trade and Consumer Affairs Ministry.

Dealers also want Putrajaya to persuade petrol companies to give deferrals on rentals and loans.

“For instance, if there are five petrol stations within a 10km area, four should be allowed to close if they want to, while one remains open,” said Abu Samah.

“Not all petrol stations want to close. Some are still able to get a steady stream of customers if they are on busy main roads.”

The MCO, which has entered its fifth week, coincided with a sharp plunge in world oil prices due to a price war between major producers and the global economic downturn caused by the pandemic.

When the order came into force last month, pump prices were RM1.82 a litre for RON95 – the most widely used fuel – and RM1.87 a litre for diesel.

For the week of April 11 to 17, the prices fell to RM1.25 for RON95 and RM1.46 for diesel.

Abu Samah said station owners make their profits via commissions based on the amount of petrol they sell.

“Usually, a dealer needs to sell about 10,000l per day in order to earn revenue, but with the MCO, most dealers are selling between 1,000l and 2,000l per day.

“As petrol is cheap and people can’t drive far, they can fill up their tanks for just RM20 and this lasts them a whole week.”

Dealers are burning up their savings when they are forced to open, and a temporary closure will allow them to at least have some money when the MCO is loosened and people can travel again.

“Our fear is that if we spend all our savings now, we won’t have enough money to buy petroleum supplies from the oil companies when the economy restarts,” said Abu Samah.

“When we don’t have enough to buy supplies, the companies will tell us to close up shop. They are ruthless.

“This is why we want the government to also compel these companies to defer the rent they charge us. Otherwise, we won’t survive.” – April 18, 2020.