Petrol stations could go dry after MCO ends – PDAM

The Petrol Dealers Association of Malaysia (PDAM) has said it is possible that fuel pumps could go dry after the movement control order (MCO) is lifted unless the government temporarily stops weekly fuel price updates, according to a report by FMT.

Datuk Khairul Annuar Abdul Aziz, who is the president of PDAM, said its members might not be able to meet the expected increase in demand after the MCO as they would not have the funds to stock up on petrol and diesel.

He added that petrol dealers have been heavily affected due to two factors: a significant drop in fuel prices and a 70% reduction in sales since the MCO. On the former, many dealers bought their stocks earlier just before the MCO came into effect, and as a result, paid more per litre than what it retails at the pumps in the weeks since.

Meanwhile, with many people staying at home in compliance with the MCO, there has been a lack of demand for fuel, with dealers taking a longer time to exhaust their stocks. “We were essentially giving customers a subsidy of more than 30 sen a litre. Luckily, prices have somewhat stabilised in the past two weeks,” said Khairul Annuar.

However, he noted that petrol dealers have already felt the effects, and they cannot afford to buy as much stocks now as their working capital has depleted – petrol stations usually require around RM150,000 to RM250,000 of working capital to buy fuel.

“My worry is that when the MCO is lifted and people are allowed to travel, there will be a big increase in demand for fuel, a demand that many stations cannot afford to meet. In the worst case scenario, you may see dry pumps in the early days of the post-MCO period or some dealers leaving the industry for good,” he said.

During the March 14-20 period, Euro 4M RON 95 petrol sold for RM1.82 per litre, RON 97 was at RM2.10 per litre, and Euro 2M diesel was at RM1.87 per litre. The MCO began on March 18, and in the following fuel price announcement for March 21-27, Euro 4M RON 95 petrol went down to RM1.44 per litre, RON 97 was at RM1.74, and Euro 2M diesel was at RM1.75 per litre.

The decline continued for the next few weeks, and as of the latest announcement for April 18-24, Euro 4M RON 95 petrol currently sells at RM1.25 per litre, RON 97 at RM1.55 per litre, and Euro 2M diesel at RM1.43 per litre. The third phase of the MCO will continue until April 28.

Petrol dealers are hoping to see prices remained fixed for some time instead of fluctuating on a weekly basis. “This will be good not just for us but for the entire oil and gas industry,” said Khairul Annuar, who added that there was a distinction between commercial and retails clients.

“The biggest clients among commercial buyers are airlines. That industry isn’t going to recover so soon. So the entire oil and gas industry will be depending on sales to retailers like petrol dealers. If we cannot stay afloat, then it is also not a good thing for the industry,” he commented.

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