(Petaling Jaya, Friday): The government has no justification for any further fuel price increases with the highest profits recorded by Petronas in history of RM 35.6 billion for the financial year ending 31 March 2005. Petronas’ after-tax profits jumped by RM 11.9 billion or 50% from RM 23.7 billion last year. Petronas’ pre-tax profits was even higher at RM 58 billion from RM 37.4 billion last year. As a result the government obtained dividends and taxes of RM 31.2 billion for 2005.

With such huge profits of Petronas of RM 35.6 billion after payments to the government US$ 31.2 billion when the average price of oil was US$ 45, Petronas is expected to earn more with the current oil price of US$ 60/-. The 33% increase in oil price will increase Petronas profits by at least another RM 12 billion and the government receipts by another RM 10 billion.

The government claims that it cannot continue to subsidise the price of petrol, which is mostly imported. Such arguments is unacceptable when the government received RM 31.2 billion from Petronas and expected to receive more than RM 40 billion for this financial year. Further even if the government refuses to bear the burden then it should direct Petronas to do so because Petronas with its huge record profits of RM 35.6 billion can afford to do so.

I have received many calls from Malaysians who are angry why they have to pay higher fuel prices when Petronas makes so much money. It is unethical and against the national interest for Petronas to record huge profits whilst Malaysian consumers have to suffer high fuel prices. Such a policy violates the basic principle that oil reserves belongs not to Petronas but to the people of Malaysia. As owners of oil earnings and reserves, the people have the right to enjoy cheaper oil prices. Petronas’ refusal to share oil profits violates the sovereign right of 25 million Malaysians.

Malaysians do not know how the huge profits of Petronas are spent for the benefit of ordinary Malaysians. So far Petronas had refused to be transparent and accountable in its financial accounts. What Malaysians know is that Petronas funds are used to bail out multi-billion ringgit financial scandals. Better the profits be spent on 25 million Malaysians than spent to rescue one or two corporate cronies or companies of BN. There is therefore no excuse by Petronas not to help to subsidise the price of fuel and reduce the burden of Malaysian consumers.

The government’s rationale that higher fuel prices are unavoidable because the fuel Malaysian uses is imported whilst our oil being higher grade is exported. The higher price of imports is not due solely to price increases but also to the ringgit peg to the US$ dollar. As the US dollar is depreciating, the ringgit is undervalued resulting in all imports to be more expensive than it should. Unless the government is confident that the ringgit peg can prevent higher prices of fuel and other imports, it should explain why there is no review of the ringgit peg?

(01/07/2005)