KUALA LUMPUR (April 25): Petronas Dagangan Bhd (PetDag) is working closely with the Ministry of Finance (MoF) on the increase of fuel subsidy bill amid near-record high crude oil prices, according to PetDag’s managing director (MD) and chief executive officer (CEO) Azrul Osman Rani.

Fielding questions from the media at a virtual press conference after PetDag’s annual general meeting on Monday (April 25), Azrul said the downstream oil and gas group understands the current predicament with the high global oil prices that are impacting the country and every other nation.

“Just to get a better feel [of the situation], if you look at Thailand today, you are looking at RON95 [prices] equivalent to RM5 [per litre] while Singapore is close to RM10 [per litre]. So definitely, there will be a deepening concern with regards to the ballooning subsidy budget that the government will have to shoulder,” Azrul highlighted.

Azrul also said PetDag is aware that the government is looking at various other initiatives including potential targeted subsidies which will focus on the B40 segment and possibly expand its scope to the M40 segment as well.

“We will support and continue to work with the government as well as the overall oil and gas industry that is operating in Malaysia. I think there are still several discussion points that we need to finalise and iron out, and we will be working closely with MoF to ensure a smooth and sustainable model that the country can adopt,” Azrul concluded.

This comes as Finance Minister Tengku Datuk Seri Zafrul Aziz told Parliament on March 10 that the fuel subsidy bill could balloon to RM28 billion — more than double from RM11 billion spent on fuel subsidy in 2021 — if crude oil prices remain at an average of US$100 per barrel.

The Finance Minister had also said the government is reviewing the fuel and cooking oil subsidy mechanism to be more targeted towards aiding and subsidising vulnerable groups and those who really need help.

Asked if PetDag’s commercial division, which sells aviation fuels, has benefited from the recent border reopening, Azrul said the division has seen a significant improvement in its financial year ended Dec 31, 2021 (FY21) but noted that there are many factors that could impact the business such as volume and price movements which the group is monitoring closely.

Azrul also hinted that PetDag had “quite a good” first quarter performance for its FY22 but declined to reveal further.

On the commercial division’s recovery, Azrul said PetDag is not yet back to its pre-Covid financial and operational performance when it comes to jet aviation fuel, which is predominately the business that PetDag operates in with regards to the reopening of international borders.

“We are hoping to leverage on our capabilities and infrastructure across all international airports to also serve the customers that would require more jet fuel as the borders open up,” Azrul said.

PetDag shares closed 84 sen or 3.8% lower at RM21.08 on Monday, giving it a market capitalisation of RM20.94 billion.