Media statement by Lim Guan Eng in Kuala Lumpur on Wednesday, 25^th May 2011: 

BN's denial that the RM19 billion profits forgone by Petronas by selling gas below market price to IPPs and TNB is not a form of subsidy another class exercise of self-delusion and mass deception 

DAP expresses shock at Energy, Green Technology and Water Minister Peter Chin Fah Kui's insistence that the RM19 billion savings enjoyed by independent power producers(IPPs) and TNB annually is not a subsidy. Peter Chin said the RM19 billion is profit forgone by Petronas annually for selling gas at RM10.70 per MMBtu, one quarter of the market price RM40 per MMBtu. BN's denial that the RM19 billion profits foregone by Petronas by selling gas below market price to IPPs and TNB is not a form of subsidy is another classic exercise of BN's self-delusion and mass deception.

This is similar to BN's previous insistence that RM540 million given to Perimekar Sdn Bhd is not commission for arranging the purchase of two Scorpene submarines worth US$972 million (RM3.68 billion) for the Royal Malaysian Navy. It is ridiculous for Perimekar to be given a contract to provide support services and co-ordination for six years despite having no previous track record or experience in handling submarines.

If the RM19 billion profits forgone by Petronas annually to assist the IPPs and TNB is not a form of subsidy then what is the correct term to describe this loss? Power generated by IPPs meets about 60 percent of the country's electricity requirement while TNB the remaining 40 percent, indicating that it is IPPs that benefit most from this RM19 billon.

After all if Petronas can sell gas at market rates, then RM19 billion annually can be used to benefit directly 27 million Malaysians, instead of the few big companies. The real question that Peter Chin and BN should answer is why the gas tariffs sold to IPPs cannot be increased higher when the prices of sugar, diesel and petrol sold to the general public and ordinary Malaysians can be increased following the reduction of subsidies?

This is the gross injustice of increasing prices paid by ordinary Malaysians but not increasing prices paid by rich companies. This RM19 billion annually in savings has enabled the IPPs to record billions of ringgit in profit. Instead of addressing this injustice by ensuring that prices are increased first on big companies instead of ordinary Malaysians, BN challenges PR state governments to subsidise ordinary Malaysians instead.

This is irresponsible as PR would definitely do so if PR has the same resources as BN has with control over Petronas and TNB. In fact, in the state governments controlled by PR, more social benefits and assistance has been given to the people as compared to that given by the previous BN government. For instance Penang PR state government has spent millions in wiping out hard-core poverty in the state, RM20 million in the yearly RM100 senior citizens, single mothers and the disabled's appreciation programme and RM12 million yearly assistance to Chinese, Tamil and Sekolah Agama Rakyat. All this was not given by the previous BN state government.

Peter Chin can deceive himself that the RM19 billion of profits forgone by Petronas is not a form of subsidy to IPPs and TNB. But he will not succeed in deceiving and deluding the people that the rich IPPs who are spared from the pain of paying higher prices. Any failure by BN to insist that the IPPs must pay gas tariffs at market prices and stop price rises beginning in June 2011, will only show that ordinary people are targeted by BN to bear the full burden of price rises.

*Lim Guan Eng, DAP Secretary General & MP for Bagan