THE Government should not be profiteering through state capitalism at the expenses of the common people.
This has prompted the call for the abolishment of the Automatic Pricing Mechanism (APM) so that Putrajaya would neither have to subsidise nor tax petrol (ie RON95, RON97 and diesel) anymore.
“The weekly prices review based on Means of Platts Singapore (MOPS) boosts profits of petroleum companies,” Parti Sosialis Malaysia (PSM) national coordinator (bureau for environment & climate crisis) Sharan Raj told FocusM.
“Indirectly, the Government is floating petrol price on a weekly basis at supplier stage but regulating price at petrol stations.”
At one hand, profits from the entire petrol sales are disproportionately consolidated within the hands petroleum corporations.
On another hand, the APM allows the Government to impose “hidden petrol tax” onto people during low prices which is extremely undemocratic.
According to Sharan, the Government must thus control the petrol supply industry which is an oligopoly of six corporations which are suppliers to nearly all retail petrol stations. They are Petronas, Shell, Petron, Caltex, BHP and Five Petroleum (new-comer).
In 2019, Pakatan Harapan (PH) spent about RM6 bil to cap petrol price which merely subsidied the profit of petroleum companies as well as benefitted owners of cars with large engine.
“The biggest financial beneficiaries from the APM are the Government itself through Petronas and BHP (a subsidiary of Boustead Holdings Bhd whose major shareholder is Lembaga Tabung Angkatan Tentera) who together hold a market share of 41% as of 2017.
“There is strong competition at retail level (more than 3,500 petrol stations) compared to petrol suppliers (six petrol supplier companies),” Sharan who is also PSM Melaka state secretary pointed out.
“Floating at pump will improve margins of cash-strapped petrol stations. Currently, most petrol stations are poorly maintained while employing undocumented migrant workers to underpay them.”
Sharan also allayed concerns that the exercise of floating petrol price at pumps would lead to higher prices across the board.
“This is never the case given the competition density is sufficient to break any oligopoly or price fixing,” he justified.
“Selangor, Kuala Lumpur, Putrajaya, Penang and South Johor have both the highest petrol consumption per capita and competition density (petrol stations).
“The problem arises if the Government fails to regulate petrol supplying corporations accordingly. They are the ones with market power that can cause serious spike in petrol prices.” – Feb 18, 2021
