INCREASE IN DEALERS’ MARGIN

Date

Description

• PDAM discussed dealer’s survival issue with PMO.
• KPDNKK, upon discussion with PMO, conducted a detailed study on justification of Dealers’ margin increment and the cost increase since the last revision in 2008.

• YB Minister of KPDNKK confirmed that his ministry has completed their study and submitted their proposal to the MoF.
• KPDNKK acknowledges that from their own study, there are approximately 700 dealers nationwide that are entitled to receive BR1M.
• Given the increase in costs over the years, KPDNKK has recommended:
  • An upward increase in Dealer’s margin for all products
  • Diesel margin to be equal that of Petrol
  • An annual increment to be introduced to allow for inflation
• However, the proposal has not been approved by MoF
• MoF request that KPDNKK be able to protect dealers from OilCo increasing their OLF. It is unfair for the government to increase dealer’s margin when OilCo keep increasing their OLF.

• PDAM EXCO personally met the YAB Prime Minister in Bera requesting the dealer’s new commission, as proposed by the YB minister KPDNKK to be approved by MoF.
• YAB PM promised the new commission to be reviewed after the 14th General Election.

• GE14 Result out, Pakatan Harapan Government takes Putrajaya!
• After a year and 2 months of wait for the GE14 to start the discussion on the commission increase with the BN led government, it seems like we have to go back to the drawing board all over again.
• Fear not, I did not give up. PDAM will persevere!

• PDAM want to be the 1st to meet New KPDNKK Minister (Malaysian Reserve)
• I called upon the newly elected government to meet up with Petrol Dealers to work on a viable new fuel retail policy and to address the increase in commission that is a long overdue issue.[i]

• Council of Eminent Persons (CEP)[ii]
• I was invited to discuss on fuel retail policy with the Council of Eminent Persons (CEP).
• This was after the CEP picked up the article that PDAM wants to be the first to meet the KPDNHEP minister.
• Special thanks to PDAM Vice President, Datuk Zamani Tambichek for arranging a meeting with Tun Daim a few days before the meeting to reconfirm our meeting with the CEP.

• PDAM briefed KPDNHEP KSU on meeting with CEP

• Meeting between PDAM, government, Petronas and CEP chaired by Tan Sri Hassan Merican

• Meeting and Workshop on Targeted Subsidy Implementation and Automatic Pricing Mechanism.
• Final proposal to the YAB Prime Minister endorsed by the workshop was increase of all product commission to be 15 sen, pending MoF and KPDNHEP ministers’ appointments.
• Price is to be stabilised until 1st-Jan-2019 and earliest implementation of new commission will be by the same date.

• PDAM meeting with YB Minister of KPDNHEP.
• Discussed on two items, specifically on fuel retail business profitability and Targeted subsidy.
• No focus was given on the increase in commission, which was a worry to PDAM.

• PDAM meeting with YB Deputy Minister of KPDNHEP
• Discussed on commission increase, OLF and increase of PDA validity from 2 years to 5 years.
• With the help of Petronas Dealer YB Ng, YB Deputy Minister promised to discuss the commission issue with YB Ministers’ from MOF and KPDNHEP.

• YB Finance Minister Announce Fuel Price to reduce drastically on 1st-Jan-2019:
  • Fuel price to reduce drastically on 1st-Jan-2019
  • Ceiling price of RM2.20 for Petrol and RM2.18 sen for Diesel.
  • Price will change weekly.
• No mention of commission increase.
• I contacted the YB Minister personally for a meeting to get explanation from MoF.
• YB Minister was overseas and arranged his officers to meet with PDAM.

• PDAM meeting with MOF.
• PDAM registered their disagreement to the weekly flotation pricing mechanism and insist on the increase in commission as per discussed with the CEP.
• MOF took note and had to wait for the YB Minister to come back to office after the new year to discuss this in more detail.

• There were many dealers nationwide that has gone into panic mode.
• A dealer with connection to YAB Tun Dr Mahathir Muhamad refused to help PDAM to arrange a meeting, even though it was earlier agreed.
• I did not panic, but upon discussion with a few dealers including YB Suhaizan Kayat (Speaker DUN Johor and Petronas Dealer), I planned a course of action to force thru an audience with the YAB Prime Minister to enable PDAM to argue our case for commission increase and monthly price flotation.
• What was planned was to conduct a peaceful gathering within closed door, with all media in attendance to create enough media attention to catch the YAB Prime Minister’s attention.
• So I planned with the media for a gathering at the Kelab Shah Alam main hall, and had almost all media in attendance.
• The event gathered unprecedented media coverage
  • The Malay Mail- (Ahad 30 Dis 2019) [iii]
  • China Press – (Ahad 30 Dis 2018)[iv]
  • The Star – (Ahad 30 Dis 2018)[v]
  • Utusan Malaysia – (Ahad 30 Dis 2018)[vi]

• The hall was just the right size that the attendance, even though only within 500 pax, was more than full.
• We created a memorandum for all in attendance to sign, together with an online memorandum to be signed by those unable to attend. In the memorandum, our demand was just:
  • To increase commission to 15 sen for all products as per discussion with CEP
  • Monthly float or APM managed float, not weekly float
  • Compensation of RM42M for the anticipated 30 sen drop in fuel price by the 1st
• The event was a huge success and the media coverage was great.
• With the help of another Petronas Dealer (Rafizal Rizuwan) from Batu Pahat, Johor, we managed to obtain a few phone numbers for PMO officers, and based on the media coverage and PDAM letter and proposal, thru the PMO Officer, YAB Prime Minister agreed to meet PDAM on the 31st-Jan-2018, a day before the price drop and weekly float to start.
• When I had executed this plan to force a meeting with the PM, and the appointment was set, PM department almost wanted to cancel the appointment after a media statement was made by a third party that petrol station will go dry.[vii]
• However, upon assuring that PDAM does not condone such drastic action, did the YAB PM agree to meet PDAM.

• PDAM also submitted to the YAB Prime Minister the memorandum signed by all the dealers during the PPBM Annual General Meeting, and that was thanks to both PDAM Vice President YBhg Dato’ Major Wahid and PDAM Secretary General YBhg Dato’ Rofaie.

• The meeting with YAB Prime Minister was postponed to Thursday at Yayasan Perdana.
• I insisted the meeting to be held on 31st as the price is expected to be reduced by midnight.
• As there were a few very important national level meeting that the YAB Prime Minister had to attend on that day, I suggested that everything remain status quo until PDAM meets the YAB Prime Minister.
• The YAB Prime Minister agreed and no price change was made by 1st Jan 2019.
• The YAB Prime Minister requested an earlier meeting with PDAM, that is on Wednesday 2nd Jan 2019 just before the Cabinet Meeting.

• Meeting with the YAB Prime Minister.
• I presented the proposal for increase in commission, monthly float and one time compensation due to big price drop.
• On top of that, PDAM also requested that the revision of APM (commission etc) to be done annually, instead of the current method, which saw 10 years lapse without any margin revision for dealers.
• The slot was for 15 minutes, but I presented for 40 minutes to the YAB Prime Minister, as the YAB Prime Minister decided that he will present this paper to Cabinet himself.

• Malaysian Cabinet approved APM revision: Increased in Commission
• Alhamdullilah, after a long-concerted effort by PDAM, our Margin under the Automatic Pricing Mechanism has been revised upwards.
• The Minister of Finance said the government has agreed that the petrol station operator margin rate be adjusted by an additional 2.81 sen to 15 sen per litre for petrol products and an additional three sen to 10 sen per litre for diesel products over the current rates. He said the last time the margin was revised was in 2008.
• However, weekly price setting will remain and no compensation be given to dealers due to the huge price fall. Any compensation to be from the increased commission.