atas permintaan seorg sahabat..
HARDEV KAUR: Petronas has to husband resources
The Petronas Petroleum Industry Complex in
Kertih, Terengganu. Petronas contributes more than 40 per cent of
Federal Government revenue.
MALAYSIA’S share of oil production is less than one per cent of the
world’s output and its known reserves are less than 0.5 per cent of
global reserves. Malaysia’s daily production is 700,000 barrels,
compared with Saudi Arabia’s 10.4 million barrels.
However, with the rising global oil, food and
commodity prices, the battle cry of some Malaysians is to use Petronas’
oil revenue for subsidies as the country is an oil exporter.
They argue that the high, and very volatile, oil price yields a higher
revenue for Petronas and that these should be channelled to help the
rakyat. The fact is this is being done. Ninety one per cent of
Petronas’ revenue is channelled to the government, leaving it with nine
per cent for reinvestment.
Petronas contributes more than 40
per cent of Federal Government revenue. Since its inception in 1974,
the national oil corporation has paid the government RM403.6 billion.
This is about 50 per cent of the government’s development expenditure
from the Third Malaysia Plan (1976-1980) to the Ninth Malaysia Plan
(1996-2010) period.
In fiscal 2008, the national oil corporation contributed RM67.6 billion to the government.
At this level, its contribution is more than the collection
from the corporate sector and income tax, which total RM43.8 billion.
Development projects such as roads, schools and hospitals financed with
Petronas funds benefit the rakyat, improve the quality of life of
Malaysians and lay the infrastructure and foundation of national growth
for the longer term.
In addition, Petronas has contributed to national development through corporate social responsiblity projects.
It
has financed human resource development through investment in
Universiti Petronas, provision of scholarships and vendor development.
For the national oil corporation to continue with its operations,
generate profit to provide funds for the government’s coffers and
finance development for the longer term, it must continue to invest in
exploration and other related activities. The cost of exploration has
risen drastically and the newer fields, which are in deeper waters and
further offshore, are increasingly more expensive to exploit.
It also needs to diversify its operations and seek opportunities overseas as Malaysia’s own resources are limited.
To
its credit, Petronas has done that over the years. Today, with
operations in 38 countries, its international operations constitute the
bulk of its revenue, overtaking exports. For the fiscal year ended
March 31, 40.3 per cent of total revenue came from its overseas
operations, surpassing revenue from domestic exploration.
Some
argue that Malaysia’s oil wealth belongs to the people and that profits
earned by Petronas should be returned to the rakyat in the form of
subsidised petrol prices.
Undoubtedly, Petronas funds have
been used to provide petroleum and gas subsidies. But direct oil
subsidies complicate macro economic management, are inefficient and
inequitable with substantial opportunity costs in terms of revenue
forgone.
Direct subsidies, in addition to being unsustainable,
also hide the true cost. They do not reduce inflation, as they hide the
fact that the prices of goods and services are rising and increase
government deficit.
If fuel subsidies had remained at the old
level, the government deficit of three per cent would have increased to
between eight and 10 per cent of gross domestic product (GDP). This
situation, according to Second Finance Minister Tan Sri Nor Mohamed
Yakcop, would be similar to an individual borrowing to the limit on all
credit cards and then borrowing from Ah Long.
This will send a
wrong message to the market, and the economy will be adversely affected
due to the unacceptable and unwelcome consequences.
In the face
of an uncertain global economic environment, rising inflationary
pressures, the subprime mortgage crisis in the US which started last
August and is yet to play out and with signs of it spilling onto the
real economy, it is important for the government to be in a strong
financial position and the flexibility to respond to changing
circumstances.
It is important that governments, including our
own, manage their limited finances prudently and not succumb to
populist policies. That would be the easy way out. But leadership, and
responsible leadership in particular, demands the right policy
measures, even if they are unpopular, that are good for the long-term
survival of the nation and benefit the rakyat.
Malaysia’s
economy is one of the most open and dependent on trade. What happens in
the rest of the world affects Malaysia’s economy. It is important,
therefore, to build strong domestic defences to cushion the impact of
the adverse external environment on the local economy and the people,
especially the poor.
Thus, the higher revenue earned by
Petronas should not be wasted on direct subsidies which, according to
Professor Danny Quah of the London School of Economics, had reached a
"tipping point". The government, he added, must be pragmatic in dealing
with the oil revenue. These must be prudently managed to provide the
"biggest bang for the buck".
The government’s subsidy bill has
been steadily rising. Last year, it spent RM53 billion on fuel
subsidies — RM33 billion on diesel and petrol and RM20 billion on
natural gas. If the government had not restructured the oil subsidy,
the bill would have exceeded RM60 billion. (Between March last year and
March this year, Petronas’ subsidy on gas to the power sector and
industry totalled RM78 billion.)
Steps have been taken to
restructure the subsidy and minimise the impact of rising fuel and food
prices on the poor and those in the lower-income groups.
Towards this end, a whole range of essential food items continue to be subsidised.
The
subsidies are targeted, more focused and equitable. Besides, the lower
subsidies at the pump, which resulted in higher pump prices, reduce
leakages and discourage over-consumption.
Public transport
operators, those who use petrol-powered taxis and hire cars, are
eligible to buy petrol at a lower price of RM1.92 a litre, up to 720
litres per month for each vehicle.
The fleetcard offers a
lower price for diesel taxis and buses. This is to keep transportation
costs affordable as the public transport system is mainly used by the
lower-income group.
With the expansion of the fleetcard system, less than 20 per cent of diesel consumption will be affected.
There is no reason for businesses to raise prices and blame it on the increase in the diesel price.
Direct benefit also accrues to car owners in the form of rebates –
RM625 to owners of cars below 2000cc. A car owner who decides not to
use his vehicle but opts to use public transport will still get the
rebate.
With this shift, the move to reduce consumption is not blunted.
Indeed,
since the reduction of petrol subsidies, there have been fewer cars on
the roads as more people are using public transport.
This has to be a positive move in conserving energy and ensuring that our limited energy resources last longer
