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. Compare prices between different insurer providers to save the most on your car insurance renewal compared to other competing services. Many payment method supported and you can pay with instalment using Atome, Grab PayLater or Shopee SPayLater. Use the promo code 'PAULTAN' when you checkout for 10% discount!
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