Following the finance ministry’s announcement that fuel prices will follow a weekly float system from next year, the Petrol Dealers Association of Malaysia (PDAM) wants the government to hold talks with its members before the move is implemented.

On Monday (December 24), finance minister Lim Guan Eng said the switch (back) to the weekly format is due to falling global crude oil prices, which will likely result in lower fuel prices, including for RON 95 petrol.

In a report by The Star, the association said that while lower fuel prices are welcomed, the move would result in losses for dealers should crude oil prices decline further. “As dealers, we have no control over the price. Say we buy petrol today, if the government changes the price tomorrow, we have to follow that even if we had bought (the fuel) at a higher price,” said Datuk Khairul Annuar Abdul Aziz, president of PDAM.

“Unlike other businesses where they can still keep a margin, we can’t, as we are at the mercy of the government. So, let’s say the price goes down every week, we are then hit (with losses) four times a month,” he added.

Khairul also noted that dealers are unable to determine how much fuel to stock because the decision was up to the oil companies. “So we can’t even buy less stock; our hands are tied,” he said, adding that dealers usually have a 10 sen per litre margin for petrol – a price decrease more than that would mean a loss on the dealer’s part.

“If the reduction is gradual and doesn’t eat up our margin on a daily basis, then it would be okay but the government needs to discuss with us. It’s right that the government wants to give that (lower fuel prices) to the rakyat and we are all for that, but if we continuously sell at a loss, matilah (we will suffer),” said Khairul.

The PDAM president is suggesting to the government to allow dealers to use a consignment system when buying fuel, or for a win-win mechanism to be put in place.