Association claims diesel subsidy withdrawal pumps up pain for 3500 petrol stations

Bumiputera Petrol Station Operators Association of Malaysia (Bumipeda) claimed a total of 3500 petrol stations in the Peninsular to have suffered losses amounting to RM181mil since the government decided to float the price of diesel in June this year.

The Secretary Hanny Julia Haron said that the diesel subsidy rationalisation had given operators a severe economic challenge.

“About 98% of stations are reportedly suffering losses from petrol and diesel sales, forcing many to shift their focus to convenience store operations in a bid to offset declining fuel revenues.

“The current trajectory could have severe long-term effects, including higher unemployment rates and reduced government revenues from taxes and levies.

“The closures or scaled-back operations would also disrupt local economies, affecting ancillary businesses like vehicle workshops and retail shops,” she said as quoted from NST news.

She also stressed that government needs to review the Automatic Pricing Mechanism (APM), which has been in place since 1983.

“The APM must be aligned with the national annual budget to reflect today’s economic realities,” she said, adding that the cost structure is heavily influenced by the US dollar, which affects margins for both petrol stations and oil companies.

She also raised concerns about the confusion and instability caused by dual pricing within the same storage tank, as operators are forced to buy fuel at high prices but sell it at lower rates.

Earlier, the government announced that diesel prices would be floated, with the retail price set at RM3.35 per litre in the peninsula from June 10.