KUALA LUMPUR, April 4 – The founding chairman and chief executive of Petronas yesterday lamented that Putrajaya has been treating the leading oil and gas company as a cash cow, especially in bailing out government-linked outfits of financial trouble. Tengku Razaleigh Hamzah, or Ku Li, said since its inception in 1974 and until 2011, Petronas paid the government RM529 billion in dividends, taxes, petroleum proceeds and export duties. He said the reliance of Petronas to help government-linked outfits out of financial trouble had been going on since 1985.
Ku Li, a finance minister from 1976 to 1984, said that year Petronas rescued the then Bank Bumiputra with a RM2.5 billion bailout, and again in 1991 when it coughed up another RM1 billion. In 1997, he said Petronas had to rescue the financially ailing Konsortium Perkapalan Berhad for RM2 billion. He added that Petronas was made to underwrite the construction of the Twin Towers, located in the heart of Kuala Lumpur, for RM6 billion and the building of the extravagant Putrajaya, the administrative capital of the Federal Government, for RM22 billion.
“This amount could have been used more productively to fund a national pension programme for Malaysians, as has been done by a certain Scandinavian country,” he said in his speech at the launch of the book “Rich Malaysia, Poor Malaysians” at the Sultan Sulaiman Club in Kuala Lumpur last night. The book, authored by Anas Alam Faizli, is a collection of essays reflecting his thoughts on energy, economy and education in Malaysia. The bailout and construction of mega projects was done during the premiership of Tun Dr Mahathir Mohamad, who initiated a series of major infrastructure ventures in the 1990s.
Ku Li said the exorbitant amount of the bailout and construction of these projects that was forced onto Petronas had also deprived the company from the much needed cash build-up for reinvestment, which would ensure its business sustainability. He said it was important for Petronas to look further afield at business investments outside the oil and gas sector, and it was critical for the corporation to have a strong cash reserve for reinvestment purposes. “It was this need for prudence that had led Tun (Abdul) Razak, the prime minister of the day (1970-1976) to impress upon me the need to ensure that Petronas would enjoy parity with such multinational companies,” he said. He said today Petronas was on par with oil majors and was ranked as one of Fortune 500’s largest and profitable oil and gas companies. “But sadly, it is being abused and treated as the piggy bank whenever the government needed cash in a hurry,” he said.
Ku Li said while subsidising of consumer goods was not the most efficient of ways in managing the high cost of living, it was fairly understandable if the government extended a helping hand to the small man. “What is sinful and cannot be forgiven is the ease with which the powers that be had been dishing out subsidies to such entities like the national power supplier, the independent power producers and some other non-power outfits,” he said. As pointed out by Anas in his book , Ku Li said since 1997 this subsidy had amounted to RM136.5 billion. He said the sad part was that while these power producers continued to enjoy subsidised fuel price, petroleum subsidy to the consumers – which purportedly cost the government RM14 billion in 2011 – was partly discontinued.
– Photo By: The Star Publication (M)