KUALA LUMPUR: Petronas Dagangan Bhd (PDB) is in discussions with the Ministry of Finance (MoF) regarding the spike in the government’s fuel subsidy bill this year, as a result of high global oil prices, says PDB managing director and CEO Azrul Osman Rani.
According to a recent statement by Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz, spending on fuel subsidies may reach RM28bil this year if global oil prices continue to trend above US$100 (RM435.65) per barrel, compared with RM11bil on the fuel subsidy bill in 2021.
“We are in close discussion and communication with the Finance Ministry.
“We understand the current predicament with the high global oil prices impacting the country as well as every other nation,” Azrul told reporters during an online media briefing after the group’s AGM.
“Just to give a better feel, if you look at Thailand today, we’re looking at RON 95 equivalent of about RM5 per litre. In Singapore, it is close to RM10 per litre. So definitely, there will be a deepening concern with regards to the ballooning subsidy budget that the government would have to shoulder,” he added.
Azrul said it is understood that the government is also looking at various initiatives, including potential targetted subsidies for the B40 income group and perhaps also the M40 group.
“We will support and continue to work with the government as well as the overall oil and gas industry operating in Malaysia. I think there’s still several discussion points that we need to finalise and iron out. We’ll be working closely with them to ensure a smooth and sustainable model that the country can adopt,” he said.
As for the group’s aviation fuel business, Azrul said PDB is “not yet back at pre-Covid-19 levels” despite the re-opening of international borders.
“However, we have seen a significant improvement over the financial year last year. We’ve looked at quite a good first quarter performance. However, I wouldn’t be disclosing any first quarter results just yet when it comes to volume,” he said.
Azrul noted that PDB is also hoping to leverage on its capabilities and infrastructure across all international airports, to serve customers that would require more jet fuel as borders open up.
PDB is also diversifying into lower carbon energy solutions towards sustainable growth including liquefied natural gas and sustainable aviation fuel (SAF).
It is working with Malaysia Aviation Group to encourage the adoption of SAF at Kuala Lumpur International Airport as a cleaner energy option.
Meanwhile, PDB is partnering with Mercedes-Benz Malaysia Sdn Bhd and EV Connection Sdn Bhd to install its own branded fast electric vehicle (EV) charger, Energise by Petronas, at five Petronas stations along major highways this year.
Azrul said the group would roll out more EV chargers “as the market grows in tandem with demand.”
“We are also looking at EVs in a pragmatic way. We do understand that this is a new emerging market. It’s not a question of if, but rather a question of when. This is one of those areas where you do not want to be way too ahead of the curve as technology is fast evolving, and we want to move in tandem with the growth of the market,” he said.
In a statement, PDB noted that in 2021, its commercial business continued to lead the business-to-business (B2B) market with more than 1,000 commercial customers despite operating amidst an economic slowdown and recorded 33% higher revenue mainly from the construction and agriculture sectors.
The liquefied petroleum gas (LPG) business further reinforced its market leadership through expanding its sales channel to Petronas stations and mini markets, allowing greater convenience and cheaper alternatives for customers’ self-service purchase.
Its Gas Petronas mobile app has also extended its coverage to over 300 locations within Klang Valley for those opting for hassle-free solutions.
The business also began supplying 14kg cylinders to the forklift industry, tapping into the segment’s growing potential.
As for its lubricant business, in 2021, it recorded a 23% volume growth in its B2B segment, largely contributed by the plantation, transportation and marine sectors.
It remained competitive in the business-to-consumer market, and accelerated growth through e-commerce platforms such as Lazada and Shopee.
This further strengthened brand affinity for its key products, Syntium and Sprinta.
The business aims to widen its network of Petronas AutoExpert branded automotive workshops from 14 to 50 outlets by end-2022.
In 2021, PDB’s retail business operationalised seven new Petronas stations and upgraded close to 90% of its stations with state-of-the-art payment terminals and cloud-based point-of-sale system.
As part of its non-fuel growth strategy, PDB also recently incorporated Mesra Retail and Café Sdn Bhd to develop its own branded ready-to-eat and ready-to-drink offerings while continuing to expand its current food and beverage solutions and Mesra-branded products including hand sanitisers and wet wipes.
Meanwhile, its branded merchandise Prysm recorded a 62% increase in sales since being featured in the Setel app, increasing traffic to its website from 60,000 in 2020 to one million in 2021.
PDB will start to offer other products on the Setel app such as lubricants and LPG.
“We will continue to future-proof PDB to prepare better against both anticipated and unexpected market forces by investing into digital solutions as well as diversifying our product portfolio and revenue streams,” said Azrul.
“As a progressive organisation, we are always on the lookout for emerging trends and strategic ventures that can further accelerate our growth momentum beyond downstream petroleum products. We are inventing, incubating and scaling these disruptive ventures such as Setel, mobile refuelling service and Prysm to become our next engines of growth,” he added.