BETTER for all
PETALING JAYA: Fuel prices may soon be revised weekly instead of monthly, wit h a maximum movement of five sen, up or down. The government i s mulling t his suggestion to keep fluctuations to within five sen, instead of between 10 and 20 sen often seen under the current system of monthly revision.
“It will benefit the end users, petrol station operators, and petroleum companies, whether the price sees an increase or a decrease,” Deputy Finance Minister Datuk Johari Abdul Ghani said in a statement yesterday.
He said the suggestion was made by petrol station operators who met him recently.
Johari said the operators had complained about a problem they faced with the managed float system for the fixing of retail fuel prices according to market value, with
the revision done once a month.
The managed float system for fixing retail fuel prices was introduced in December last year with the aim of saving the government about RM11 billion in subsidy this year.
They claimed that petroleum companies were somehow taking advantage of the current price mechanism.
“For example, they would deliver fuel in large quantities to petrol stations at the end of the month if they anticipate a drop in the retail prices the following month.
“But if retail fuel prices are expected to go up next month, they (oil companies) would reduce the quantity delivered to the operators at the end of this month.”
Johari believed that if the matter is not addressed, over 3,200 petrol station operators nationwide, about 70% of whom are bumiputras, will incur losses.
Petrol Dealers Association of Malaysia (PDAM) president Datuk Hashim Othman told the Sun that the likelihood of these operators losing money would be less if the prices are revised weekly.
This was because the price difference is likely to be larger from month to month, rather than weekly.
He said petrol stations are forced to sell fuel at the price set for a particular month, even if they had purchased it from the petroleum companies in larger bulk at a higher price the previous month.
“For example, if the retail fuel price is RM1.95 per litre this month and the companies are predicting a reduction of 10 sen per litre next month (January), they will sell large quantities to the stations by end of this month (December) at RM1.95.
“However, come January, petrol station operators will have to sell at RM1.85 per litre, if that is the set retail price for the month. That way, we would lose 10 sen for each litre that we sell,” he said.
“People keep saying that fuel station operators will profit each time fuel prices increase, but that’s not the case,” he added.