KUALA LUMPUR: The government must revise its fuel purchasing system for petrol station operators to save them from losses due to price fluctuations, an opposition lawmaker said.

PKR secretary-general Rafizi Ramli said that rather than having to buy fuel wholesale, it would be more equitable for the stations if a consignment system was adopted, as seen in countries such as Australia and South Africa.

Then station operators will not have to pay up front to giant oil companies for fuel.

Currently as “agents”, they are only paid a commission by the oil companies based on the volume of sales.

Under the current wholesale system, oil companies such as Petronas, Shell, Petron and BHP require that petrol stations buy stock in cash that is at least three days’ worth of their sales at any given time.

This exposes the station operators to losses when oil prices go down, as they buy their stocks of petrol and diesel at a higher price.

“[In] the consignment system, the financial risks faced by operators are removed. The petrol prices can also be revised frequently without any financial impact on key stakeholders,” Rafizi said in a statement.

Rafizi warned that petrol station operators are at risk of closing down under the automatic price mechanism Putrajaya uses to fix the retail price of petrol and diesel, saying that at current pump prices retailers would have racked up losses of up to RM15,000.

They will have to bear these losses for the rest of the month, and run the risk of debt snowballing, owing to the higher price they paid to petrol companies.

Rafizi said by implementing the consignment system, the excuse that fuel prices cannot be revised on a weekly basis no longer exists.

Putrajaya resisted calls for weekly revisions of petrol and fuel pump prices despite the continued plunge in global oil prices (which have reached below US$50 (RM178.50) a barrel this week, and is expected to be at US$40 a barrel by the end of the month).

It removed fuel subsidies early this month due to the tumbling of global oil prices and set up a managed float pricing system where prices would be set on a monthly average price. The price would be announced at the end of each month for the following month.

Rafizi said that with weekly revisions, RON95 petrol might reach RM1.40 a litre by the end of January, as opposed to RM1.91 a litre that consumers are forking out this month.

“Weekly price reviews of petrol and diesel prices will see it fluctuate according to market prices, and Barisan Nasional can no longer collect billions of ringgit in hidden taxes as what is happening now,” he said.

Rafizi previously alleged that Putrajaya made RM633 million in one month from the difference between world oil prices and the prices Malaysians pay for petrol and diesel.

He said if the federal government refused to revise the system, it meant it wanted to maintain above-market prices to collect taxes from the commodity. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on January 9, 2015.