KUALA LUMPUR: The Petroleum Dealers??? Association of Malaysia (PDAM) is proposing three moves it says the government and oil companies could undertake to reduce the amount spent in oil subsidy.

Cutting down the operating hours of petrol stations, stopping the issuance of new PDA oil trading licences and putting a lid on the over promotion of oil usage to consumers are three ways the government can cut down on oil subsidising cost, PDAM said.

The government spends an annual RM19 billion for subsidising oil and this figure is expected to go up with the increased price of oil in the world market which currently stands at US$120 a barrel.

In a statement issued here yesterday, PDAM said the first way would be to limit the operating hours of the petrol stations to 6am to 11 in the night.

Currently, more than 90 per cent of petrol stations in Malaysia are operating for 24 hours.

With the shorter hours, petrol station operators will be able to directly reduce their power consumption by 50 per cent, PDAM said.

As power supply comes from TNB (Tenaga Nasional) and the fuel used by TNB is subsidised by the government, therefore indirectly the government would be able to reduce its subsidy to this sector, it said.

Limited operations hours for petrol stations would also prevent the practice of selling subsidised oil to parties who should not be receiving it.

These sales are said to be usually conducted late at night, PDAM said.

The second way would be to limit the opening of new petrol stations.

PDAM suggested that the Ministry of Domestic Trade and Consumer Affairs immediately stopped issuing PDA oil trading licences.

It said the licenses should not be issued for five years to see immediate results.

In the system used to determine the price of oil at petrol stations, there are many allowances given to new oil companies.

For example, it said the cost of building a petrol station is also entered into the cost of operations by oil companies.

This cost is then included in determining the price at the petrol pumps ??? oil for which the government is giving subsidy.

PDAM also said there were already too many petrol stations located in the same place competing for the same market.

The third way to cut down the subsidising will be to immediately stop the incentives for customers.

With so many kinds of incentives offered by oil companies to consumers, there are cases of consumers buying petrol that they don???t even need just to get a chance to win prices like cars, cash, travel packages and so on, PDAM said.

These purchases of petrol further adds to the subsidising cost for oil and it also does not help consumers adopt a more prudent approach in the use of oil, it said.

??? Bernama