From The Malaysian Insider
By Asrul Hani Abdullah Sani
KUALA LUMPUR, Dec 10 — Pakatan Rakyat (PR) leaders are worried about the government’s continued reliance on Petronas especially after its revenue for the first half of the financial year dropped by RM59 billion.
Petronas’ net profit before tax for April-September 2009 was RM31.2 billion compared to RM63.3 billion in the same period last year. At the same time, revenues dropped 37.5 per cent to RM98.2 billion from RM157.2 billion.
The decline in crude oil prices led to the decline in profits and the future looks bleak as global prices have remained stagnant at around US$75 since September.
The estimated profit expected from the state oil firm for the financial year ending March 2010 is expected to be in the region of RM65 billion compared to RM89 billion or an overall decline of RM24 billion.
PR de facto leader Datuk Seri Anwar Ibrahim argued that the government needs to revisit its Budget due to the depreciating price of crude oil.
“The BN government tabled a Budget of RM208 billion for 2009 in October 2008 and additionally another mini Budget of RM60 billion to be spent in 2009 and 2010 was tabled in March 2009. The projection of income for 2009 was made based on the crude oil price leading up to September 2008.
“In the past, we have insisted that the government revisit the 2009 Budget in light of the severe changes in the international crude oil market when the crude oil price plunged in the last quarter of 2008. This sensible and responsible call was ignored, reflective of the arrogance of the Barisan Nasional government.
“One year later, we are faced with a situation where it is very clear that the government will not have enough money to pay for all the expenses committed and announced so far as Petronas’ results so far indicate a nearly 50 per cent drop in profits,” he explained to reporters during a press conference.
PR believes that the government’s high dependency on Petronas’ revenue is unsustainable and its estimate shows that the national crude and natural gas reserves can only last 23 and 43 years respectively if no new discoveries are made.
Petronas’ international equity reserves of the crude and natural gas reserves are expected to last 23 and 37 years respectively.
Anwar pointed out that the government’s growth rate target for 2010 is “too optimistic” since the government will not have the funds.
“We call for Barisan Nasional to be more transparent and come clean with Malaysians on the overall impact of the drop in Petronas’ revenue. The Finance Minister should come to Parliament and explain what is the revised projection of government revenue for 2010 and how the reduction in government revenue will impact government spending in 2010.
“There is also the bigger question of the direction of the national economy and the government must come clean with Malaysians,” he stressed.
Petaling Jaya Utara MP Tony Pua said the sharp drop in Petronas’ profit will increase the Budget deficit for 2010.
“The sharp drop in Petronas’ profits will add further pressure onto the government’s revenue source for the 2010 financial Budget as its original estimates of RM56 billion collection from the petroleum sector may not materialise in full. If the government is unable to either find additional revenue or reduce its expenditure, then the budget deficit for 2010 is expected to increase significantly above the projected 5.6 per cent.
“It is hence disappointing that despite the government having collected bumper revenues amounting to RM217 billion from Petronas over the past four years as a direct result of escalating oil prices, it did not have the simple foresight to put aside any of this income for future use when the oil price declines. In fact, not only was every sen of the oil and gas windfall revenue over the past decade spent in full, the government incurred additional debts,” Pua explained.
Pua stressed that the government should not place the burden on the public through taxes due to the irresponsible expenditure, corruption, incompetence and mismanagement by the government.
“The government should take this valuable opportunity to restructure the large and bureaucratic government machinery to be more lean and efficient. Before the government even consider taking more from the rakyat, it should firstly implement fully transparent and accountable best practices for the implementation of government procurement and projects,” he said.
