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Petronas Should Act In The National Interest By Paying Out RM 10.7 Billion In Fuel Subsidies To Forestall Any Increase In Fuel Prices

Speech
- DAP 2005 Budget Forum
by Lim Guan Eng

(Kuala Lumpur, Wednesday): DAP strongly opposes the proposed 10 cents to 20 cents jump in fuel prices to alleviate the government’s burden of having to pay out RM 10.7 billion in annual fuel subsidies.  DAP believes that there can be a win-win solution if Petronas can act in the national interest by paying out the RM 10.7 billion fuel annual subsidies from its huge profits to forestall any price increase so as not to burden ordinary Malaysians. 

Prime Minister Datuk Seri Abdullah Badawi had hinted that fuel price increases was unavoidable as the government can not afford to continue to pay out RM 10.7 billion if world oil prices continue to rise. Fuel prices would rise to more than RM 2 per litre from the present RM 1.37 per liter if there were no fuel subsidies.

According to a Star report dated 25.6.2004, the amount of petroleum subsidies totalled RM6.8bil compared with RM4.3bil in 2002, RM7.4bil in 2001, RM8.4bil in 2000, and RM3.6bil in 1999.  Whilst fuel subsidies may be required to be reduced to further cut the 2005 deficit at RM 17.7 billion or 3.8% of the GDP, we can still enjoy low fuel prices if Petronas is willing to step in.

For the year 2005, petroleum is expected to contribute RM 24,123 million to the Government’s revenue comprising:

  • Petroleum income tax of RM 11,274 million as a result of the rise in oil price of USD 30.35 per barrel in 2003 to  USD 37.00 per barrel in 2004.;

  • Export duties of RM 1,576 million;

  • Petroleum and gas royalty of RM 2,575 million;

  • Income from exploration of oil and gas of RM 98 million; and

  • Petronas dividend of RM 8,600 million compared to RM 9,100 million in 2004.

This RM 24,123 million in 2005 is almost RM 1 billion higher than the petroleum revenue of RM 23,291 million for 2004.

Based on the huge amount of oil-related tax revenue, it is clear that Petronas has benefited from the rise in oil prices. It is regrettable that we do not know how much Petronas is earning, but we can be quite certain that Petronas can afford the RM 10.7 billion in fuel subsidies required to maintain our present fuel prices.

The government must be responsible about increasing fuel prices as it has great impact on the economy, especially small businesses. For example, every 10 cent increase in fuel prices, the costs for a transport company would rise by 4-5%. Such a rise would wipe out the business’ profits. The BN government must realize that the negative impact of any fuel increases will be felt fully by the small businessman, poor and ordinary Malaysians. How then can the 2005 Budget be called a small man’s budget if the fuel price is increased?

In the interests of transparency DAP urges the government to reveal Petronas profits and utilize these huge profits for the benefit of ordinary Malaysians. As an oil producing country, Malaysians should enjoy the benefits by paying low fuel prices. What is the point of being an oil exporter if we still have to pay high fuel prices like other oil-importing countries.

(15/9/2004)

* Lim Guan Eng, DAP Secretary-General