Firstly, since Pak Lah took the helm,
Petronas has contributed RM 146.5 billion to the government. Petronas
has been in operation since 1974 and contributed a total of RM 336
billion to the government. Pak Lah's first 4 years in office received
43.6% of Petronas' 35 years of total contributions. It is more than
what Mahathir received in 20 years, inflation adjusted. And it does not
even include this year's contributions!
Is your reaction that of disbelief? Are you wondering where all this money has gone?


When common folk talked about our oil
revenues, we usually think of Petronas and the government as being the
same entity. That was my perception when I wrote my last article: The
"56 Billion Ringgit Questions", but little did I suspect that I would
have to completely reconsider my understanding almost the moment I
posted the article.
I posted the article
on 3:45pm June 4, and moments later I received an SMS that petrol price
is going to go up. I was about to chuck the SMS away until I logged on
to Malaysiakini and confirmed that the news was indeed true.
I
was shocked by the suddenness and quantum of the increase as Najib's
reassurance of no price hike was still fresh in memory, and Shahrir was
only hinting of a price adjustment in August the day before. My first
reaction was that Pak Lah has just hammered the last nail in his own
coffin.
I am not an economist by any
means, but I come from a poor family and I have been through the years
where every cent counts. It was completely baffling to me why Pak Lah
would make such a sharp increase in petrol prices while the whole
country was still reeling from the pain of the recent hike in the
prices of food and other essential items. The combined effects are
going to cause so much hardship to so many people that I seriously
doubt Pak Lah is going to survive the fallout of it. And it got me
thinking hard ...
The Mystery of Our Oil Money
Let's
get back to the mystery of our oil money. After many hours of research
and deliberation, I came to realize that the relationship between
Petronas and the government is much more complicated than it looks on
the surface. The two are not the same entity after all; and by some
recent announcements I think there could even be open hostilities
between them. Read:
• Petronas could go bust by 2018 if all its profits are handed to the Government …
• Petronas should not be made the scapegoat for the fuel price hike
One
key understanding is that although Malaysia is a net exporter of crude
oil, our products are of very high quality and are primarily for export
while we consume lower grade oil that is mainly imported from the
Middle East.
While the exploration,
production and export of our crude oil are handled almost exclusively
by Petronas, the import side is a bit more complicated. The importing
and retailing of petroleum products are carried out by companies like
Shell, Exxon, Petronas, etc. These companies are mandated by the
government to sell below cost, thus they are compensated for their
losses by the Government in the form of subsidy.
Yes
– our government does subsidize our petrol. But it also receives money
from Petronas in the form of loyalty, taxes and dividends. Petronas is
reported to have contributed 52.3 billion ringgit to the government for
the financial year ended March 2007.
Is
that a fair contribution to the government? I will be eagerly waiting
for Petronas' supposedly full disclosure. I don't give much hope that
the full disclosure will reveal details like why some big shots get to
live like kings with private jets and helicopters, but it should give
some basis for some intelligent guess-nalysis.

How much is the Government getting from Petronas?


The
graph above shows Petronas' contribution to the government over the
past few years. I plotted it along with the yearly average crude oil
price. The yearly contribution was obtained from Hassan Marican's
interview in RTM1 reported in Guang Ming Daily and the average oil
price from EIA. As you can see, Petronas' contributions go up nicely
with the price of crude oil, as most of us would expect.
What
will be Petronas' contribution this year? That will be anybody's guess.
Would it be RM 70 billion? RM 80 billion? Whatever it is, it seems that
Petronas is mighty reluctant to cough out its profits to the government.
How much is the petrol subsidy costing our government?
Our
daily crude oil consumption is 501,000 barrels, or 183 million barrels
per year. Each barrel is 158 liters, and typically yields 73.8 liters
of petrol, diesel and other by-products after refining (data from EIA).
Our yearly petroleum consumption is thus:
183 million barrels X 73.8 litres/barrels = 13.5 billion litres.
At the current crude oil price of 130 USD per barrel, the market price is RM 3 per litre for petrol (according to Shahrir).
Our
government's yearly subsidy on petroleum can be calculated as follows.
For lack of data I will assume that the cost price of petrol and diesel
is the same.
Before Price hike:
The average price of petrol and diesel = (RM1.98 + RM1.52) /2 = RM 1.75
Subsidy per litre = RM 3 – RM 1.75 = RM 1.25
Total Subsidy = RM 1.25/litre X 13.5 billion litres = RM 16.9 billion
After Price hike:
Average price of petrol and diesel = (RM 2.7 + RM 2.52) / 2 = RM 2.61
Subsidy per litre = RM 3 – RM 2.61 = RM 0.39
Total Subsidy = RM 0.39/litre X 13.5 billion litres = RM 4.0 billion
What do all these figures mean?
Firstly,
since Pak Lah took the helm, Petronas has contributed RM 146.5 billion
to the government. Petronas has been in operation since 1974 and
contributed a total of RM 336 billion to the government. Pak Lah's
first 4 years in office received 43.6% of Petronas 35 years of total
contributions. It is more than what Mahathir received in 20 years,
inflation adjusted. And it does not even include this year's
contributions!
Is your reaction that of disbelief? Are you wondering where all this money has gone?
Mahathir
is known for his opulence and extravagance and has created monsters
like the Twin Towers and F1 circuit to match his distorted ego. But
what has Pak Lah done that is worthy of being mentioned? To give you a
perspective, it costs RM 11 billion to build Putrajaya, and the order
of RM 20 billion to build all our toll roads. Whatever happened to this
mind boggling 147 billion ringgit? It seems to have just vanished into
thin air. Something must be seriously wrong somewhere.
Now
the 56 billion petrol subsidy quoted by Shahrir. My own calculations
indicate that it should cost the government RM 16.9 billion. My
calculations do not include subsidy for gas, but would it amount to a
difference of RM 39 billion? Either my calculations are completely
wrong or Shahrir is bullshitting. I would appreciate if somebody can
verify my calculations.
My calculations
show that with a RM 52.3 billion contribution from Petronas, the
government should still be making a net profit of RM 30+ billion. And
the recent price hike is going to bring an extra RM 17 billion to Pak
Lah's coffers. Is it conscionable for the government to make such an
obscene amount of money at the expense of such widespread suffering of
the people?
I am shocked beyond words by
what I discovered today. The level of corruption and mismanagement by
the Barisan Nasional government is much much worst than my wildest
imagination. I am so sick and disgusted that I just want to cast the
whole Barisan Nasional government to hell right away. Right now I will
not hesitate for a moment to lend my support to Pakatan Rakyat to step
in to take over the government.
Do I
believe that Anwar is able to bring down the price of petrol and give
Sabah and Sarawak 20% oil royalty? I have no doubt that he can, if he
manages to gain back the control of the oil money. I do not agree with
his oil policy, but at least with Pakatan Rakyat there is hope that
ordinary people like us are able to participate to bring about the
right changes.
This is the time for us
all to wake up. If the level of suffering and darkness of the current
moment is not enough to wake you up, I don't know what will.
Look
who is suffering now? We all are. Do the 50 years of racial politics
bring about the supremacy of any race? I hope our sad state of affairs
is convincing enough to show us that racial politics cannot work. It
never will.

We have to forget about race, religion and other
trivial differences and stand united as one. This is the time to
exercise our collective power, our makal sakhti. This is the only
strength that we have to cast out the slime-bag power-mongers that are
hell bent in destroying each other and bringing down the whole country
with them.