Petronas turns into an election issue

Petronas turns into an election issue
February 26, 2008

Questions pertaining to the usage of Petronas' coffers to placate the
ruling government's mega projects came into the limelight during
campaigning in the country's 12th general election.

PKR deputy president Dr Syed Husin Ali queried the continuing use of the
national oil producer's profits to finance Prime Minister Abdullah Ahmad
Badawi's mega projects. He also urged the government to stop abusing
Petronas' profits.

"Beginning from the previous prime minister (Dr Mahathir Mohamad)
unnecessary projects which do not benefit the nation have been funded by
Petronas' profits," he said in a statement.

He said Abdullah, who promised to end the practice of using Petronas
money for mega projects, had also reneged on his promise.

For the financial year ended March 31, 2007, Petronas posted a net
profit of RM46.4 billion, up 7.7 percent. Revenue was up 10 percent
(RM184.1 billion) while shareholders' fund rose 16.3 percent to RM170.9
billion.

In terms of payment to the government, Petronas contributed RM52.3
billion or 66.2 percent of its profit as tax, dividends, royalties and
export duties. Over the past 33 years, a total of RM336 billion was
contributed to the government.

Net importer
Petronas president and CEO Mohd Hassan Merican, however, warned that
Malaysia would become a net importer of oil by 2010 if consumption growth
continued at four percent per annum.

The company itself was also concerned over the subsidy it was handing
out. For the year 2007, it forked out a total of RM15.6 billion. Total
subsidy since gas prices were fixed in 1997 now stood at RM58.2 billion.

Some of the "national" projects Petronas had undertaken since 1997
include funding the Formula One races and the Sauber racing team, Twin
Towers, and Putrajaya.

Petronas funds were also used to bail out Bank Bumiputera in the 1980s
and the buying of debt-laden Konsortium Perkapalan Bhd Malaysian during
the Asian financial crisis in 1998.

Incidentally, Mahathir's son Mirzan owned KPB (which had debts of RM1.7
billion) at the time.

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