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Why an oil producing nation like Malaysia is not laughing all the way to the bank, even as crude oil prices are increasing in world market.


Media Statement
by
Ronnie Liu Tian Khiew

(Petaling Jaya, Tuesday): A corridor check with some of my colleagues shows that one litre of petrol can cater for 10-16 km for most Proton vehicles. This way, one can calculate how much extra one has to pay after the recent price hike depending on his or her car's consumption.

  • Wira 1.3 -  10 km per litre;

  • Waja 1.6 -  13 km per litre;

  • Satria 1.6 -  12 km per litre;

  • Gen 2 1.6 -  16 km per litre

Eddie, who needs to send his kids to school before going to the office, used to spend RM400 a month on petrol. He now has to pay RM428 per month after the 10 sen per liter price increase for petrol. He is furious.

Just like many other Malaysian employees, he has not been getting any increments in recent years. He is now very concerned and worried about the next round of inflation as diesel prices has also gone up by 20 sen per liter, a 23% increase. Malaysians were previously told that the inflation rate for 2005 would be 2.5%. But that was before the recent price hike of petrol and diesel.

Eddie was wondering why the BN Government cannot use some of Petronas' earnings to offset the RM2.2 billion (which the government will save due to the price hike), when I told him that Petronas had profits of more than RM32 billion in 2004 and was projected to make RM50 billion in 2005.

The Prime Minister and his deputy have repeatedly warned about removing all subsidies on petrol and diesel in the near future. They have given Malaysians an impression that the national coffer is drying up and they simply have no other solution but to squeeze the people for more money.

Malaysians should not be surprised if the petrol price goes up to more than RM2 per litre by the end of next year.

Malaysia, as an oil-producing nation, would not have reached such a sad state if the BN Government leaders have been running the country with transparency, accountability, prudence and good governance.

Many Malaysians may not know that Malaysia is not a member of OPEC. It is therefore entirely up to Malaysia to decide how many barrels of crude oil to produce, and at what price she wants to sell as a non-member of the cartel.

As for Petronas' accounts, only the Prime Minister, not even the Finance Minister, can have direct access to them. As a result, Malaysians have no way of checking the quantity we are selling to oil traders and at what price. Members of Parliament have never been able to get a detailed answer from the PM, whether it's under Mahathir's or Abdullah Badawi's administration.

Minister in the PMs Department Datuk Mustapha Mohamed has written an article to explain why the Government needs to raise the prices of diesel and petrol. He too has failed to answer some of the questions raised by the DAP. These include losses incurred in future market and the detailed income and expenses of Petronas.

In his article published today, Mustapa claims that the Government continues to provide subsidies on petrol, diesel and cooking gas. He even claims that the Government is now paying a higher subsidy despite of the price hike. He puts the 2005 estimated subsidy at RM8.959 billion and the tax exemption on petroleum products at RM7.848 billion, totaling RM16.807 billion. He claims that the recent price hike could only slash the subsidy amount by RM2.2 billion.

Mustapa has nevertheless admitted that Malaysia may become a net importer of oil in four years if Malaysia fails to reverse the current trend. He claims that Malaysia produces 700,000 barrels a day, versus a domestic daily consumption of 520,000 barrels. He, however, did not tell Malaysians the quantity and selling price of our oil produce, and the quantity and buying price of oil from other countries. Malaysians have no way to find out whether the Government has done the right thing to safeguard the interest of Malaysians without such figures.

DAP would also like to know the extent of selling crude oil in the futures market on the part of Malaysian authorities since the 1997 meltdown. It is believed that Malaysia has been selling crude oil in the futures market very heavily to avoid getting assistance from the IMF. The price for crude oil was hovering around US$19 to US$20 per barrel at the time.

Many Malaysians know that Malaysia has been selling most of our oil for a better price (it is of a high quality with less sulphur content) and in return buying lower quality oil from other oil producers for domestic consumption. This strategy would only work if the authorities had not fumbled in the futures market. Our prices have been locked in at a much lower price than the current price of US$52 per barrel, thanks to the poor judgment and dismal management on the part of the Government under the Mahathir administration. We are still waiting for Tun Mahathir to enlighten us on the matter.

We believe Malaysia is now selling better quality crude oil at a price much lower than the price of sub-quality oil we import from other oil producers. Mustapa has avoided touching on this sensitive matter.

Instead of Petronas laughing all the way to the bank, the Japanese, Taiwanese and other importers who have bought oil from Malaysia in the futures market are now probably getting their oil supply practically for free!

Malaysians are now paying for the price for voting in a government who does not know how to run the country in a cekap, bersih dan amanah (efficient, clean and trustworthy) manner. It is also sad to note that ordinary people/voters have no say in any matters after giving them 92% of parliamentary seats, a big mandate by any standards.

One of the slogans the DAP used in the nationwide protest on oil prices increase last Sunday was "Oil Prices Increase. You Asked for It?" This slogan was meant to provoke Malaysians into thinking if they had given too much support to the BN Government in the last general elections, so much so that BN leaders have become too arrogant and simply do not care about the difficulties facing the people.

So, how much have we, as a nation, lost out because of this BIG blunder? Your guess is as good as mine. Only the PM can tell us the truth if he wishes to do so.

(10/5/2005)


* Ronnie Liu Tian Khiew, DAP International Secretary and NGO bureau chief