What prompted Shell to reverse its Sabah petrol station closure decision?

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Shell Reverses Sabah Petrol Station Closure Decision Following Government Discussions

Shell has decided to reverse its plan to close over 30 petrol stations in Sabah after engaging in discussions with the Sabah government. The company, through Shell Timur Sdn Bhd, had initially announced the cessation of operations for 34 stations in the state from January next year, a move that was reportedly aimed at sustaining company performance by shutting down less productive outlets. This decision has now been rescinded, with the Sabah Chief Minister Datuk Seri Hajiji Noor welcoming the reversal and acknowledging the federal government's attentiveness to the situation in Sabah.
State Government Engagement and Federal Intervention

The reversal of Shell's closure plans followed a series of discussions involving the Sabah government. Sabah Chief Minister Datuk Seri Hajiji Noor stated that the state government had brought the issue to the attention of the federal government, expressing appreciation for their sensitivity and responsiveness. While the specific details of the discussions are not elaborated, the involvement of both state and federal authorities appears to have been a catalyst for Shell's change of decision.
Rationale for Initial Closure and Impact

Shell Timur Sdn Bhd had confirmed in June that the closures were part of an ongoing review to sustain the company's performance, targeting less productive fuel retail stations. The initial announcement indicated that 10 stations in Tawau, two in Semporna, six in Lahad Datu, 12 in Sandakan, two in Labuan, and one each in Likas, Telipok, and Kuala Penyu would be affected. This closure was projected to result in approximately 500 job losses across the state, highlighting the significant socio-economic impact of the decision.
Underlying Issues and Automatic Price Mechanism

Reports suggested that the closures were linked to the automatic price mechanism (APM), a formula used to determine fuel prices in Malaysia, which had reportedly not been reviewed since 1998. This prolonged period without review was cited as a cause of sustained losses for Shell over the years. The Sabah government holds a 15 per cent equity stake in Shell Timur through the Yayasan Sabah Group, underscoring the state's vested interest in the company's operations within Sabah.

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What prompted Shell to reverse its Sabah petrol station closure decision?

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