Petrol (2): The devil is in the details

By Helen Ang

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Removing subsidies, which include petrol, is a policy prescription.

We can’t get a substantive and well-informed policy discussion going in the public arena unless the full facts and figures are available. They’re not. We live in OSA-land where official information is not transparent because it is controlled by a small cabal of high-ranking civil servants.

From Petronas’ establishment in 1974 up to 31 March 2007, the state oil company made a group profit before tax amounting to RM570 billion, RM359 billion of which was paid to the Malaysian government.

Don’t you want to know why this government now claims it cannot afford fuel subsidy? In turn begging the question: What is the most socially responsible way of using Petronas money to bring optimal benefit to the rakyat?

The key issue here is accountability and how, with its recent move, the policymakers have not been accountable to Malaysians.

Petronas revenue and government expenditure are slippery to pin down, like oil and grease. Former Opposition Leader Kit Siang says we’ve been unable to even arrive at a correct figure to the Petronas profits accrued over the years; furthermore the period of 31 March 2007 to current quarter should be of added interest, what with skyrocketing oil prices.

Present Opposition leader Dr Wan Azizah says there are differing figures quoted on the amount of oil subsidy. She recounts Minister of Domestic Trade and Consumer Affairs Shahrir Abdul Samad saying it was RM56 billion, Second Finance Minister Nor Mohamad Yakcop, RM28 billion and in the government 2007 financial report, RM12 billion. She estimates it to be closer to RM8-10 billion.

A discrepancy in the billions!

Why does Petronas reveal its accounts only to the prime minister and not to Parliament? Why does its chairman answer to the PM? The ex-premier was a megalomaniac who splurged on Putrajaya and Twin Towers. He advised/approved Petronas bailing out Bank Bumi, Renong and MISC (guess who?). Oh, and how can we forget Proton…

While it’s true the Petronas annual report is available, this however “discloses only basic ‘financial highlights’ and summary figures such as revenue and profit before tax” without giving details, according to Anil Netto’s Asia Times article.

http://atimes.com/atimes/Southeast_Asia/JF11Ae02.html

One argument usually forwarded to support the government position is that subsidies distort the market. Others typically complain how a Beamer or Merc driver benefits from cheaper petrol whereas a poor man who does not own a car wouldn’t [more in ‘Petrol (3)’]. There’s certainly academic debate to be had about the costs and benefits of a subsidy, but affordability – given Petronas’ lucrative income – shouldn’t be one of the arguments.

The government and Petronas (which is wholly government-owned) both lack the moral high ground for withholding subsidy, looking at how they’ve been forking out for prestige-building exercises. Ultimately, what do the many mega projects, the Philharmonic Orchestra and the Sauber F1 team-racing circuit do for Che Su in Gong Badak and Pak Long in Batu Rakit?

Another criticism is that whereas the subsidy is yanked from Joe Rakyat, the Independent Power Producers are still being subsidized (through lopsided contracts) – IPPs of which “many [are] owned by companies linked to the country’s politically connected and wealthiest big business families,” Anil writes.

He also blogged on June 27 that Petronas is setting up a hospital called the Prince Court Medical Centre which is price-tagged at RM544 million. News is that the Petronas hospital, like its MPO, F1 and other big ticket items, is classy … and clearly not for the have-nots.

We might ask what is the amount of money lost to leakages over the past, what – 30-plus years? If we had been more serious about curbing wastage and profligacy, and conscientious about making the best of the Petronas trusteeship in the best interests of the rakyat, why, the subsidy today would be more than covered.

Researchers such as Dr Lim Teck Ghee have reiterated the call for oversight on the accuracy and integrity of official data, usually only reluctantly divulged to the public. We may still remember Dr Lim’s run-in with Umno officialdom over the Malay corporate equity findings of the Asli report.

On the recent parliamentary tabling of the mid-term review of the Ninth Malaysia Plan, he says: “Past attempts by many quarters to persuade the Government to open the official data sets on corporate ownership have been met not only with foot-dragging but also by a flood of misinformation in the belief that a big lie told repeatedly will appear to be the truth and prevent further public scrutiny.”

The full complement of particulars informing the subsidy system is inaccessible or they are selectively presented. We have to return first to the alpha – ‘A’ for Accountability.

Civil society requires transparency of official info before even the impartial experts possessing the relevant know-how can begin to tell us what’s what. We have to pass a Freedom of Information Act and rend the shrouds of secrecy.

Petrol (1): The U-turn gostan government