(Petaling Jaya, Wednesday): The government can only abolish the RM 27 billion fuel and gas subsidies to allow market pricing by distributing the RM 27 billion savings to the poor and Malaysians earning less than RM 3,00 per month to reduce their financial burden of inflation. With the rise of international price of oil to more than US$81 per barrel, the government can no longer sustain the subsidies paid which also benefits the wealthy.

The government would have to pay RM 14 billion in subsidies with Petronas paying RM 13 billion as gas subsidies. Petronas can no longer afford paying out fuel and gas subsidies close to RM50 billion in the last 10 years, principally to Tenaga Nasional Bhd and Independent Power Producers (IPPs). IPPs should also bear the burden in view of the huge profits earned at the expense of huge gas subsidies provided by Petronas and Malaysians. For its financial year ended March 31, 2007, national oil corporation provided TNB with RM 5 billion (42.7%) in gas subsidies and IPPs RM 6.7 billion (57.3%).

In other words, IPPs benefited more than TNB in buying cheap gas from Petronas at subsidized rates. This means that of the RM 50 billion in gas subsidies paid out by Petronas over the last 10years, RM 28.3 billion went to IPPs. Is it in the national interest that IPPs should benefit RM 6.7 billion in gas subsidies in 2006 and likely more in 2007, without returning any benefits back to Malaysians? Subsidies are part of socio-economic measures meant to help the poor. Something is very wrong when subsidies are offered to huge companies to further pad their extra-ordinary profits.

In view of the high costs from smuggling and loss of efficiency from fuel subsidies, DAP would only support the abolition of subsidies if the savings from the RM 27 billion spent on subsidies last year is shared with working Malaysians earning less than RM 3,000 per month.

This was enable every working Malaysian and senior Malaysian who is above 60 years of age whose income is below RM 3,000 a month to get at least RM 3,000 a year to deal with rising inflation following the removal of subsidies. Better the subsidies paid out by Petronas and the government be shared with 27 million ordinary Malaysians than parceled out to wealthy Malaysians and companies like the IPPs.

The time has come for Malaysians to take direct benefit from such oil revenues when Malaysians do not see how the the RM 53.3 billion in taxes and dividends contributed by Petronas to the government this year is spent. There is no reason why Malaysians can not benefit directly from oil revenues when Malaysia is an oil exporter and an oil importer can afford to distribute S$2,500 every year to poor and middle-class families.