Forward    Feedback    


An Open Public Debate On Malaysia’s Energy Policy: The Need For Higher Fuel Prices From Removal Of Oil Subsidies And How Petronas Profits Of RM 200.3 Billion And RM 246 Billion Paid To The Government Are Used For The People’s Benefit?

Challenge Letter Sent to Mustapa Mohamed
by Lim Guan Eng  

(Putrajaya, Friday):

DAP Secretary-General Lim Guan Eng challenges Minister in Prime Minister Department Datuk Mustapa Mohamed to an open debate on Malaysia’s energy policy.


YB Datuk Mustapa bin Mohamed                                                 2nd September 2005.
Menteri di Jabatan Perdana Menteri,                                           
Kementerian Perdana Menteri,
Pejabat Perdana Menteri,
Aras 1, Blok B5, Parcel B,

Yang Berhormat Datuk,

An Open Public Debate On Malaysia’s Energy Policy: The Need For Higher Fuel Prices From Removal Of Oil Subsidies And How Petronas Profits Of RM 200.3 Billion And RM 246 Billion Paid To The Government Are Used For The People’s Benefit?

On behalf of Malaysians adversely affected by rising petrol prices, DAP wishes to seek an open public debate on Malaysia’s energy policy, in particular the need for higher fuel prices arising from the removal of oil subsidies; and how our national oil corporation Petronas Bhd’s accumulated profits of RM 200.3 billion and the additional RM 246 billion paid to the government since its formation in 1974 have benefited the people.

Malaysians are concerned with the statements made by the YAB Prime Minister and by YB yourself of further petrol price increases following the rise in oil prices to a record US$ 70 per barrel. Whilst we acknowledge the government can not continue to sustain oil subsidies of RM 16.8 billion at such high prices, Petronas as a direct beneficiary from such high oil prices, can.

YB have stated that after the three fuel price increases this year to RM 1.28 per liter for diesel and RM 1.62 per liter for petrol, the government still has to bear taxes forgone and oil subsidies of RM 14.5 billion as compared to the previous RM 16.8 billion losses. In other words the fuel price increases represents a savings of a mere RM 2.3 billion.

What is RM 2.3 billion when compared to the RM 31.2 billion given to the government by Petronas in 2004, which is less than 10%? RM 2.3 billion is insignificant when compared with the profits of RM 35.5 billion earned by Petronas in 2004, after giving RM 31.2 billon to the government. DAP can not understand why the government can not afford less than 10% of the payments given by Petronas or why Petronas can not afford to bear less than 10% of its profits.

No one would object to a review or even a removal of oil subsidies provided that Petronas shares its huge profits earned from high oil prices with Malaysians. It is unfair for Malaysians to pay high prices for petrol when Petronas is able to enjoy huge profits. In 2005 alone, if Petronas gives every Malaysian RM 1,000 out of its RM 35.5 billion profits, Petronas would still has a remainder RM 10.5 billion.

Corruption, financial malpractices and abuse of power have eaten much of the RM 246 billion given by Petronas to the government since its formation 30 years ago. At the same time, Petronas can still earn RM 200.3 billion during the same period after giving RM 246 billion to the government. How have the people benefited directly from the RM 200.3 billion in net profits earned by Petronas?

The government and Petronas must not forget that oil is a natural resource that does not belong to any one person but belongs to all 25 million Malaysians. There has been no concrete plan by the government to help the poor face rising fuel prices and inflation, which reached the highest level in 6 years at 3.2% in June 2005. At the same time highway toll charges continue to rise and road tax for diesel cars remain unchanged.

Currently, owners of private diesel-run vehicles pay a road tax that is four times of the rate of petrol-run vehicles. The expensive road tax was premised on the basis of a low diesel price, which stabilises at 65 cents per litter until 2000, when it was increased to 70 cents per litter.   When diesel price was at 65 cents, petrol price stands at RM 1.10, which means diesel users paid only 59 percent of petrol price, thus the justification for higher road tax. However, diesel price has gone up seven times in six years (2000-2005) with its current price at RM 1.28, 79 percent of the new petrol price. 

The time has come for the Government to introduce a complete package of abolish the dual pricing of road tax and introduce a uniform road tax price for all vehicles of equal engine capacity as well as reduce the highway toll rates to reduce the impact of fuel increases. DAP opposes the fuel increase because the failure to provide such a complete package will only place the full burden on ordinary Malaysians whilst huge companies like Petronas and PLUS record huge profits at taxpayers' expense.

Need To Develop Alternative Energy Fuels When Malaysia Becomes An Oil Importer By 2009

Whilst question have been raised on how Petronas have utilised its accumulated profits of RM 200.3 billion and the government used  the RM 246 billion given by Petronas over the last 31 years for the people’s benefit, Petronas and the government have a responsibility towards alternative fuels such as biodiesel, hybrid fuels or biogas to replace our reliance on petroleum. 

According to the BP Statistical Review of World Energy in 2004, Malaysia produced an average of 912,000 barrels of oil per day, consuming 504,000 barrels and exporting 408,000 barrels. Unless new oil fields are discovered, Malaysia would be an oil importer by 2009. The government and Petronas have a responsibility to develop alternative fuels from to build towards a future only 4 years from now when Malaysia becomes a net oil importer in 2009.

The government should engage in an open public debate on an issue of national importance. In view that petrol price increases would affect the people’s livelihood and standard of living, there is a need to understand and explore other policy options to ensure that the burden of price increases is shared by all. Economic growth has already fallen by more than half to 4.1% in the 2nd quarter of 2005 as compared to 8.4% last year. For Petronas to benefit with huge profits at the expense of Malaysians is unacceptable, irresponsible and against the national interest.

This open debate on our country’s energy policy is also in line with the democratic values enshrined in our Federal Constitution and can be held at your convenience at any setting or place of your choosing. An early reply is appreciated.                                                                        

Yours faithfully,





* Lim Guan Eng, DAP Secretary-General

Your e-mail:

Your name: 

Your friend's e-mail: 

Your friend's name: