The government should consider bringing back the automatic price mechanism (APM) to replace the current weekly oat system as one of the ways to stabilise fuel price while finding the right balance for both consumers and retailers.
Petrol Dealers Association of Malaysia (PDAM) president Datuk Khairul Annuar Abdul Aziz said the APM was “working just fine” until the previous administration decided to go on a monthly, and then weekly, adjustment.
“With the APM, it will not fluctuate so frequently which we are okay with,” Khairul Annuar told The Malaysian Reserve.
Prime Minister Tun Dr Mahathir Mohamad stated on May 16 that petrol prices will be kept at current rates, without detailing if the weekly price mechanism will be scrapped. Dr Mahathir noted, however, that the government will subsidise the price of fuel where necessary.
“It is still unclear at the moment. I guess they are trying to find an alternative mechanism now, be it the APM or other systems. But the main goal is to stabilise the price and also maintain the health of the government’s coffers,” Khairul Annuar said. The APM had determined fuel prices since 1983 before it was replaced by the managed float system in December 2014.
Under the APM, the government sets the fuel price at a level that cannot be changed within a specified time frame despite movements in global crude oil prices.
Khairul Annuar said if the new government decides to reintroduce the system, the components of the APM need to be revised to reflect the current costs.
“It has not been revised in 10 years. The last revision was made in 2008, so this needs to be taken into consideration,” he added.
Petrol pump prices have remained stagnant in the last seven weeks. The last change made was for the March 22-28 period, which saw a two sen increase for all fuel segments.
The RON95 petrol is currently priced at RM2.20 per litre and RON97 at RM2.47 per litre. Diesel is sold at RM2.18 per litre.
Khairul Annuar said the constant prices have enabled operations at petrol stations to be steadier.
“There is a sudden reduction in margins so far. Stock delivery has been very steady and there is no rush at the pump station before the price goes up. Everything has been running smoothly,” he said.
Bumiputera Petrol Dealers Association of Malaysia committee member Kamaruddin Atan supported the notion to stabilise fuel prices as it has proven to be effective in the past.
“The retail cap will enable prices to remain stable for a reasonable period. The system allows for a three-to-six-month calculation of oil prices in the global market, which will give us a longer-term estimate on price movements.”
“This will be beneficial to all stakeholders including the government, oil companies, dealers and consumers.”
Kamaruddin, who runs a petrol station in Ampang, also hopes that the arrangement will lead to lower operational costs for oil firms and dealers.
“We hope this will reduce certain handling and delivery costs. That way oil firms can minimise their charges on station operators,” he said.
The weekly price system, implemented on March 29 last year, has been a bane for retailers who complained about thinning margins due to the spiralling costs of fuel and levy payments for foreign workers. Over 300 petrol stations nationwide have so far closed up shops.
PDAM had earlier expressed its hope to be the first association to meet the new domestic trade, cooperatives and consumerism minister as fuel price is one of the 10 main agendas on Pakatan Harapan’s 100-day manifesto.
The ruling government under Dr Mahathir had listed 10 items it hopes to achieve within the coalition’s first 100 days in office, which include targeted petrol subsidies, stabilising fuel prices and the abolishment of the Goods and Services Tax.