The introduction of weekly fuel price adjustments may have been easier on consumers’ pockets, but it’s apparently become a burden on petrol station operators, with The Star reporting on business owners ceasing their operations as a result.

Each of the fuel retail brands has seen between 30 to 40 stations close down since the implementation of the monthly price adjustment scheme in December 2014, according to 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 publication, adding that as a representative of Shell, Petronas, BHP, Caltex and Petron’s executive committees, he realised that station operators in Sabah and Sarawak – where traffic volume is lower – were among those affected.

“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 petrol mart or convenient store income to subsidise the weekly loss,” he said.

Khairul added that dealers may have to cut jobs to reduce their monthly overhead expenses, in order to cushion their losses. “If cost continues to be an issue, 14,000 people will lose their jobs as we will go for full self-service,” he said, referring to the amount of pump attendants that are currently being employed across the 3,500 stations nationwide, out of a total of 50,000 employees.

The reason operators were losing money, said Khairul, was because they needed to sell their fuel stock at a loss due to a drop in ceiling price, adding that they needed more time to clear their stock at the previous prices. “Carrying weekly stock means a total loss for the dealers if they cannot clear it quickly before the new price is announced.” he said.

Khairul noted that this was especially true for RON 97 and diesel fuels, which have high supply but low demand. “For RON 95 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,” he said. An estimate by PDAM put the losses dealers were bearing every week at between RM3,000 and RM5,000 – a particularly high figure considering some stations are only earning around RM5,000 a month.

Khairul called the weekly price adjustments “unhealthy,” saying that dealers want a 5 sen limit in adjustments the week before, in order to stabilise the market and protect dealers from both gains and losses. The steeply rising overhead costs since commissions to station operators were last revised in 2008 meant that it’s due time for a review on the agreement as well, he added.

“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,” Khairul said.

In response, domestic trade, cooperatives and consumerism (KPDNKK) minister Datuk Seri Hamzah Zainudin urged station operators to look for other sources of income to complement the sale of fuels, in order to generate a larger profit, according to Bernama.

“It is up to the petrol station operators to find alternatives to make more profits and not only depend on profit from the sale of fuels. It is their own creativity to do something by operating a petrol station not merely for petrol but also to carry out other business activities.

“For example, a petrol station in my village in Perak is thriving because it also has other businesses such as a cafe, dhoby, car wash and numerous other services,” he told reporters, adding that the government wanted consumers to enjoy fuel prices at the current market rate.