Petrol stations anticipate boost amid working capital challenges

PDAM does not discount the possibilities for changes on the price ceilings for petrol and diesel after interstate travel is allowed


PETROL stations located along interstate highways are expected to see their operations rebound between 70% and 90% of normal fuel sale as the government allows interstate travel for those who are fully vaccinated.

Petrol Dealers Association of Malaysia (PDAM) president Datuk Khairul Annuar Abdul Aziz said the newly lifted movement restriction would boost operations for stations located along the highways, where business has been as low as 5% of normal fuel sales.

He noted the improvement in terms of fuel sale will be noticeable almost immediately, although it will not return to the normal level before the various phases of the Movement Control Order (MCO) was enforced due to school closure.

“Depending on the location, stations located along interstate highways can see businesses going back to around 70% to 90% of normal fuel sales.

“Other areas will see a short burst, which will coincide with the current rush as well as increased sales at the start of weekends and long holidays.

“However, in terms of sales for the convenience stores at the stations, it is only slowly picking up as the items sold are not considered essentials and people are still cautious when it comes to non-essential item purchases,” he told The Malaysian Reserve.

Khairul Annuar stated despite the expected pick up in sales, petrol dealers will face a challenge in building its working capital to purchase sufficient fuel to meet demand.

Working capital for petrol dealers depleted tremendously when the price of fuel crashed at the beginning of the MCO, he said.

“Our working capital has been shrinking steadily over the past two years as we continue to operate at a loss.

“So, as sales pick up, the main challenge for us is to build up our working capital to enable us to purchase enough fuel when business revives.”

Other obstacles that petrol dealers are cautious of include the health condition of their workers to ensure uninterrupted business operations amid the pandemic, as well as measures to regain the workforce.

He said many employees have quit due to the nature of high turnover rate among the staff in the industry and petrol dealers have yet to fill in the vacancies due to reduced working hours and cost reduction.

“Many dealers found there is no take up for the job vacancies that are being advertised now.”

Starting Monday, individuals who have completed their Covid-19 vaccination are allowed to travel interstate as 90% of Malaysia’s adult population have been fully inoculated.

Prime Minister Datuk Seri Ismail Sabri Yaakob said there will no longer be roadblocks at state borders for the purpose of interstate travel. He also encouraged those going back to their hometowns to take Covid-19 tests before travelling, although it is not compulsory.

Meanwhile, Khairul Annuar said the association has yet to receive any update on the price caps for petrol and diesel following the lift on travel ban. He, however, does not discount the possibilities for changes to be made to the price ceiling after interstate travel is allowed.

The government capped the price for RON95 petrol and diesel at RM2.05 and RM2.15 per litre respectively in February, following the rise of global crude oil prices.