It has been reported that isolated cases of fuel supply disruptions have been happening at petrol stations. A trade association has indicated why, explaining that the reasons include the widening difference between subsidised and market-rate fuel prices, happening on top of extra costs for digital purchases, Malaysiakini reports.
According to Bumiputera Petrol Station Dealers’ Association of Malaysia president Abdul Aziz Sapian, any supply disruption goes beyond a temporary logistical issue. “The supply disruption is not merely a temporary logistical issue, but reflects a structural mismatch within the existing system. Operators function within controlled margins as ‘price takers’, yet bear increasing costs and risks without the ability to adjust prices,” he told the publication.
His remarks, which were endorsed by the Malay Chamber of Commerce Malaysia and the Malaysian Economic Action Council, were made following media reports, social media posts, and on-the-ground observations that certain petrol stations have run out of diesel.
Aziz said that the current price set through the automatic pricing mechanism (APM), which has been adjusted weekly since April 2017, has created a “mismatch” with the actual price of stock purchased by dealers. “The physical fuel supply chain operates on a longer cycle, involving procurement planning, delivery, and distribution. This creates a situation where retail prices change faster than the actual cost of stock at the station level,” he explained.
“As a result, operators are exposed to price volatility risks. When prices fall, they are forced to sell inventory purchased at higher prices without any compensation mechanism, leading to stock losses,” he added.
Aziz said rising fuel prices have sharply increased operators’ working capital needs, while physical and structural constraints continue to limit their ability to adjust operations. “Under the targeted subsidy mechanism, particularly for diesel, operators are required to purchase fuel at full market price but sell it to consumers at a lower subsidised rate,” he said.
As such, he said the price difference is not paid directly to operators, but is instead claimed by oil companies from the government, effectively forcing operators to advance subsidy financing using their own capital. “In practice, given daily sales volumes and minimum stock requirements, this capital exposure can reach hundreds of thousands of ringgit at any one time, positioning operators not merely as retailers but as informal financiers of the subsidy system,” he said.
He said that this financial pressure is further compounded by delays in payment, which lock up working capital and increase reliance on short-term financing, along with additional financial costs. He added that the transition to cashless purchases for fuel also costs dealers an extra one percent due to the merchant discount rate (MDR).
Aziz said the situation has prompted calls for a comprehensive review of pricing mechanisms, cost structures, and policy design to ensure the viability of petrol stations as a critical component of the national fuel supply chain, while safeguarding economic stability and public welfare. He added that current industry trends pointed to an increasingly unsustainable business model, with members moving to sell their petrol stations.
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when price go down, all these associations say sell at a loss. when price goes up, complain capital exposure. so apa lagi mau? either way banyak complain.
I may be mistaken, but from a business standpoint, price volatility is an inherent part of operating in any market. So, why selling inventory purchased at higher prices—are highlighted as requiring external compensation, while gains during favourable pricing periods are fully retained. This creates a perception of asymmetric risk-sharing, where downside risks are socialised but upside gains remain private.
“As a result, operators are exposed to price volatility risks. When prices fall, they are forced to sell inventory purchased at higher prices without any compensation mechanism, leading to stock losses,”
Ermm…currently fuel prices is on an upward trend, which means they are making a lot of money.
Dino – Well once it goes up don’t bring it down, this is your chance to end the subsidy drug addiction, do away with the subsidy. People need to curb their joyrides and needless wastage of fuel. Vehicles that are way old to be fit for the roads need to be totally written off, those are highest fuel consumers and there are a lot of those junk out on the roads. High fuel prices will force those low-lifes to finally get rid of those dastardly trash cans on wheels.
Finally someone talking true economic sense. It will also force P1 and P2 to sell products with the latest tech to combat fuel cost increase. We are generally a dumping ground for obsolete tech in vehicles because our market can sustain it. Cut subsidies and let everyone live in reality. Reduce other things like income and sales taxes, that way it balances.
Forever complaining la these people. Price go down bising about losses. Price go up, never save money from profits for a rainy day. What sort of fantasy land are they living in where they expect life to be easy every hour of every day?
At the time when government said the amount of fuel subsidies given to rakyat is rm6bil per month.
Should this ongoing for some time, I would rather let the government remove the subsidies by 50%, and focus the money on items like health and education. Public housing. And better public transportation. And food security.
And also safe road networks. And let police continue to use Honda Civic FE even with 1 million km clocked on the odometer.
No, 6 billion ringgit a month on fuel subsidies are just too much. If one feel the petrol or diesel price is too much, that means he can’t afford to own one. Use ehailing or a motorcycle please.
Everywhere else in the world fuel prices are rocketing skyhigh. I am ok to pay rm3.00 per litre, for the sake of future generations.
.. oil companies do not run the petrol stations themselves. They instead invite individuals (sole proprietors) or small companies to operate the stations as dealers. As a result, oil companies avoid having to come out with lots of capital & the dealers become like their ‘protective shields’ in times of crisis.
feel free to tutup kedai if cannot tahan market conditions