Bumipeda urges govt to replace fixed fuel commission system

Association aims to submit the memorandum to the ministry before the end of the month


THE Bumiputera Petrol Dealers Association of Malaysia (Bumipeda) plans to submit its recommendations to the government to revamp the fuel commission system, as operators continue to reel over fluctuating petrol pump prices.

The one-year-old association, which represents about 2,700 Bumiputera petrol station operators, wants the Domestic Trade, Cooperatives and Consumerism Ministry (KPDNKK) to scrap the fixed commission system and replace it with a commission-based metrics.

Bumipeda president Datuk Abu Samah Bachik (picture) said one of the key issues to be tabled is to consider an 8% to 10% commission per litre and scrap the present fixed-fee mechanism.

“The present commission has been at the same level since 2008, but operational costs have gone up. We hope it can be implemented as soon as possible before more petrol retailers close up (their) shops,” Abu Samah told The Malaysian Reserve (TMR) in a recent interview.

The association aims to submit the memorandum to the ministry before the end of the month.

The association’s 2,700 members represent about 70% of the country’s petrol station operators.

Bumipeda had earlier been urging for the revamp of the commission system. Presently, they gain 12 sen for every litre sold to customers, but the weekly fuel pump price mechanism has thinned margins, especially when prices drop.

Operators are also pressed with the rise of other costs, including minimum wage and levy payments for foreign workers.

Last year, the Petrol Dealers Association of Malaysia (PDAM) forwarded a proposal to help operators plug the gap in the costs in a four-hour meeting with KPDNKK.

PDAM president Datuk Khairul Annuar Abdul Aziz said the discussion with the ministry also included other issues as well as suggestions to improve the execution of the weekly fuel price mechanism.

KPDNKK Minister Datuk Seri Hamzah Zainuddin was reported as saying that the government would make necessary revisions to the mechanism.

However, no announcement has been made so far.

Speculation of a change from the weekly pricing mechanism to a daily format has risen the anxiety among petrol station owners.

Abu Samah said a daily price mechanism, similar to those applied in developed countries, would further thin earnings and many dealers would not be able to sustain their operations.

Samsulbahrin Saim, who operates a Petronas (Petroliam Nasional Bhd) petrol station on the East West Link, said the future of the fuel retail business hangs in the balance amid all the uncertainties.

“We are worried that our margins will shrink further if the fuel pump price changes daily. It is likely that things will be decided after the election. Until then, we are waiting anxiously,” he said.

TMR had reported previously that close to 300 petrol dealers had abandoned their business since the implementation of the weekly fuel mechanism on March 29 last year.

The dealers complained that the mechanism had created rifts with the oil companies on stock management, as both sides strived to minimise losses or maximise gains, depending on the price movement.

It is said that at least 50% of the dealers nationwide, who are low-volume dealers, will suffer this year as selling price, cost and margin are determined by the government, while stock management for most brands are held by the oil companies.