PetDag increases 2019 capex to RM500m

More new concepts at Petronas stations such as Setel will be introduced, says MD


PETRONAS Dagangan Bhd (PetDag) has budgeted RM500 million in capital expenditure (capex) for 2019 to be spent on expanding and refurbishing its retail network of petrol stations and Mesra convenience stores, as well as digital initiatives.

Its MD and CEO Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir said the domestic marketing arm of national oil company Petroliam Nasional Bhd (Petronas) intends to grow its retail network, which is currently the largest in the market, with 1,057 petrol stations nationwide.

“We plan to have about five to 10 more stations this year…we did about 12 stations last year. We have substantial landbank, so it’s now about optimising this landbank,” he told reporters after the company’s AGM in Kuala Lumpur yesterday.

Syed Zainal also said these new petrol stations would be located in strategic areas with high volume and high-density population.

Last year, the firm’s capex was reduced to RM300 million compared to RM400 million in the previous year for the upgrade and refurbishments of existing stations, as well as overall business activities.

Meanwhile, Syed Zainal said PetDag will introduce more new concepts at its stations such as Setel, a petrol e-payment solution deemed the first in South-East Asia.

He added that Setel has seen the number of transactions triple to about 100,000 presently since its launch in November last year.

“We are going to roll out Setel to the whole of Klang Valley by May and the rest of the country towards the end of this year,” Syed Zainal said.

At the end of 2018, Setel had been introduced to over 100 Petronas stations in the Klang Valley. The e-wallet allows users to pay for petrol using their smartphones prior to filling up at Petronas stations.

PetDag chairman Datuk Md Arif Mahmood said the introduction of Setel is also in line with the group’s plan to increase income contribution from its non-fuel business in order to remain relevant, as well as to mitigate the impact of crude oil price volatility.

“The whole idea is to increase non-fuel income. Given where the market is today, we need to offer what appeals to customers. So, we’re addressing their pain points and refurbishing facilities. Our target is to push non-fuel contribution to group income to at least 30% from the current 12%,” he added.

The group’s net profit fell 44.8% to RM849.85 million in the financial year ended Dec 31, 2018, from RM1.54 billion in the previous year.

The decline was attributed to the drop in oil prices in November and December, which impacted its inventory valuation.

Meanwhile, PetDag expects to benefit from the government’s targeted petrol subsidy for the B40 (bottom 40% of Malaysian households) income group, which is expected to be introduced around mid-2019.

“Petronas customers are predominantly B40 (members), so we’re in a good position because we have the biggest network in the country so far,” Syed Zainal said.