Opposition wants govt to lay off Petronas coffers
By Chan Kok Leong, The Edge
As oil revenue increased, so has government expenditure. In tandem with this, Petroliam Nasional Bhd’s (Petronas) retained profits has suffered a drastic reduction.
According to the opposition, it is time the government stop bleeding “the goose that lays the golden eggs” and insulate the national oil and gas company from abuse.
During a press conference at the Parliament lobby this morning, DAP publicity secretary Tony Pua (Petaling Jaya Utara-DAP) called on the government to set a medium term goal for Petronas.
“We should set a medium term goal for Petronas to retain at least 50% of its profits for future reinvestments,” said Pua.
In addition to that, the opposition wants revenue contribution to the federal government be properly managed and controlled to ensure that the windfall revenue is invested in economically productive and necessary sectors such as human capital, renewable energy and green technology.
“In better economic times when the growth rate is above 3% per annum, at least 20% of these contributions should be saved in a National Stimulus Fund for use during economically challenging times,” Pua added.
According to Pua, in line with rising oil prices, Petronas’ contribution to the federal government has increased from RM19 billion in 2004 to RM43.9 billion in 2006. This is expected to rise to RM67.8 billion in 2009.
“In percentage terms, oil and gas revenue constituted 20.1% of federal government’s revenue in 2004 and this reliance is expected to hit 43.5% in 2008.”
Petronas’ contribution to government coffers comes in the form of dividends, taxes, royalties and export duties.
In 2009, Petronas increased its dividends to 25% or from RM6 billion (2008) to RM30 billion despite a 14% decline in net profit to RM52.5 billion due to lower crude oil prices and higher operating costs.
“With the exception of Kelantan, royalties paid to state governments, which amounted to RM2.3 billion in 2004, was increased annually to RM6.2 billion in 2009,” Pua added.
“Due to its increasing contributions to the federal government, Petronas retained profits for reinvestment has declined significantly.”
The percentage of retained profits for future investments declined from 42.5% in 2005 to 31.2% in 2007 to 21.1% in 2009.
“This trend is extremely alarming as most oil majors in the world such as ExxonMobil, Royal Dutch Shell, Texaco and ConocoPhillips retain more than 50% of their annual earnings for future investments,” said Pua.
According to Pua, the federal government’s operating expenditure has doubled from RM80 billion in 2004 to RM161 billion in 2009.
