Price Adjustments Curb Spikes, Ensure Supply Continuity - BHPetrol
By Siti Radziah Hamzah
KUALA LUMPUR, March 14 (Bernama) -- The adjustment of fuel prices under the Automatic Pricing Mechanism (APM) is a critical tool to manage volatility in global oil markets and ensure a stable, continuous fuel supply in Malaysia, BHPetrol said.
Chief executive officer Azizul Azily Ahmad said aligning market prices with subsidies was necessary to curb leakages and ensure government assistance reaches eligible recipients.
He noted that significant price differences relative to neighbouring countries could create incentives for smuggling and unusual purchasing patterns, thereby placing pressure on domestic supplies.
Speaking to Bernama, he added that sharp increases in global prices would widen the gap between subsidised domestic prices and prevailing international market rates.
Recently, the government announced that retail prices of petrol and diesel at Malaysian fuel stations would be adjusted in line with movements in global oil markets to address current market uncertainties.
Under the revision, retail prices of Research Octane Number (RON) 95 and RON97 petrol were raised by 60 sen per litre, while diesel prices in Peninsular Malaysia increased by 80 sen per litre.
However, the government maintained the subsidised price of RON95 petrol at RM1.99 per litre under BUDI95, the targeted subsidy programme for eligible RON95 users. Subsidised diesel prices remain at RM2.15 and RM1.88 per litre under the Subsidised Diesel Control System (SKDS) and Subsidised Petrol Control System (SKPS), respectively.
Azizul Azily said the adjustment was important to prevent supply migration, where sudden spikes in unusual purchases could trigger stock-outs at certain locations and disrupt public mobility.
On operations, he said BHPetrol manages a network of 420 stations supported by a real-time monitoring system to ensure each outlet maintains sufficient supply to meet demand.
He added that the system allows the company to automatically detect inventory levels and arrange immediate deliveries from depots, particularly during price movements that trigger sudden spikes in retail demand.
“Under the APM formula, margins for oil companies and station operators are predetermined to ensure the industry remains sustainable even when global oil prices surge,” he said.
He noted that the implementation of SKDS 1.0 and 2.0 is sufficient to absorb cost pressures for the daily goods transport sector and public services following the price adjustment.
“Through the use of fleet cards and cash cards, eligible operators continue to enjoy subsidised prices, which theoretically means there is no justification for arbitrary price increases for essential goods by industry players,” he added.
On Iran’s warning that oil prices could surge to as high as US$200 per barrel, Azizul Azily said the industry had previously experienced prices exceeding US$150 per barrel in 2008. He added that the greater concern would arise if energy supplies from West Asia could not be delivered to the region.
He said such price levels would not only strain the government’s subsidy funds but also directly affect global shipping and logistics costs for importing petroleum products into the country.
“Our challenge is not merely the price of raw materials, but the ability to ensure logistics and shipping contracts remain intact should shipping companies withdraw due to security risks along key trade routes,” Azizul Azily said.
-- BERNAMA