KUALA LUMPUR (June 3): The Petroleum Dealers Association of Malaysia (PDAM) has called on the government to defer the implementation of the RON95 subsidy rationalisation until the regulated margins imposed on the industry are revised.

These include the fixed dealer margin termed the automatic pricing mechanism (APM) margin, which on RON95 “no longer reflects current operating costs” as it has been unchanged since 2019.

PDAM also highlighted the discrepancies between the merchant discount rate (MDR), charged as a percentage of sales, and sales and dealers’ commission, which is based on litres of fuel sold.

MDR refers to fees charged to merchants on transactions paid electronically.

“PDAM, representing operators of over 4,000 petrol stations nationwide, calls on the government to defer the implementation of the RON95 subsidy rationalisation until two critical issues, which directly affect the sustainability of the industry, are fully addressed,” PDAM said.

Separately, PDAM on its website said it seeks to be “actively involved in the development of the merchant/reimbursement portal to ensure reconciliation is transparent, accurate, and guided by a fair standard operating procedure”.

It further highlighted the need for a new RON95 commission model. “It is vital that the revised commission structure for RON95 is implemented concurrently with the targeted subsidy rollout. Any delay will have a direct negative impact on station profitability and cash flow, jeopardising the sustainability of the nationwide fuel retail network,” it said.

Malaysia is en route to rationalise subsidies for RON95 fuel, which is currently sold at the pumps at a discount to market prices, in the second half of this year.

The government in June last year removed the blanket subsidy on diesel at the pumps in Peninsular Malaysia in order to curb leakages due to smuggling of diesel to outside Malaysia and to the commercial sector, which is supposed to buy the fuel at market price.

It is understood that APM margins for fuel retailers have been revised upward for diesel following the subsidy rationalisation.