KUCHING: Petroleum Dealers Association of Malaysia (PDAM) is currently collecting data on the negative impact of weekly price change as well as compiling a list of stations which have closed down to be presented to the relevant ministry during their forthcoming meeting, hoping for mutually beneficial solution.
The meeting might be held sometime this week. The price adjustment loss or cost affected by price fluctuations weekly has caused petrol stations in the nation to struggle according to PDAM Sarawak representative Dennis Tan yesterday.
“I can safely say all dealers are complaining. This might not be linked to current issue but for the last couple of years at least, we have seen petrol stations closed down but then again several reopened,” he said.
“Minister for Domestic Trade, Cooperatives and Consumerism (KPDNKK) Datuk Seri Hamzah (Zainudin) himself also knew that petrol station operators or dealers nationwide are struggling as their ministry has conducted a nationwide study last year and in a meeting with PDAM and Ministry of Finance (MOF) recommended that commission of petrol station operators or dealers be reviewed upwards,” he said.
Tan also said he was compiling employment data for petrol stations in Sarawak for comparison, involving employees in 2008 to 2009 and 2016 to 2017.
“Employment in petrol stations in Sarawak as a whole has dropped 31 per cent from 2008 to 2009 period compared to currently or 2017. Kuching saw a drop by 30 per cent while Miri-Bintulu region
(35 per cent) and Sibu (28 per cent). This is also due to the commission not being adjusted since 2008. We have seen two major adjustments in wage cost. EPF has sought a one per cent increase from employers, credit card charges have risen, fuel product evaporation has risen due to higher fuel purchase price,” he lamented.
“All these rising expenses with no way of increasing revenue as price is set by government. The weekly price swing, especially on a down swing, just compounded the already difficult situation faced by petrol station operators. If the government does not intervene and adjust the much needed increase in commission especially on diesel then this trend will surely continue, leading to more unemployment. Since 2008, it is estimated over 1,000 jobs have been lost in the petrol station industry alone,” he pointed out.
“Unlike in Peninsular Malaysia, we don’t engage foreign workers but we provide jobs for locals (Sarawakians). I would say those who are heavily burdened by various loans to run the business are definitely in crisis mode. If full deregulation by the government happens soon, these operators will surely go bankrupt. At least if the commission is adjusted upwards, these operators have a chance to settle their loans and exit this industry before the coming full deregulation,” Tan said.
He also said operators had no control over stock level and price because they were determined by oil companies and the government.
“Compounded by that fact, we are also bound by the Franchisee-Franchisor agreement. And so we are not permitted to simply create sales opportunity. There is limitation or restriction we are facing. Starbucks, McDonalds and KFC outlets among others at petrol stations are run by other operators who leased the spaces from oil companies directly,” he added.
When called up at random recently, most of the petrol station dealers or operators in the state said their businesses do not permit them simply to sell anything they like to cushion losses from weekly price drops.
When their income was dampened by the continuous drop in fuel price, they claimed of being unable to sustain overhead costs and also unable to cope paying workers’ salary and given no choice they might have to resort to terminating them (workers).
This action, they cautioned, might cause people to lose their jobs and escalate into a social problem.
“The chain effect of weekly drop in price and petrol station operators affected by the swing in price would be causes of concern. As we have contract with oil companies and operating on a Franchisee-Franchisor agreement, we cannot simply sell anything that is saleable to help cover our losses caused by the drop in fuel price,” one of the operators said.
Hamzah told a press conference in Kuala Lumpur recently that consumers must understand that oil price fluctuates depending on the current world market force.
On closing down of stations following the mechanism of weekly price fixing, he said it was up to the wisdom of the operators on how they run their respective business. He urged them to open side shops to sustain their business.
Hamzah also said whatever policy is imposed on petrol station operators the government will ensure that it would also benefit consumers.