In view of the shocking developments as inevitable result of the sudden oil price hike, I would like to raise several issues with regards to the situation in Petronas which I believe most people are not aware of.
This is especially pertinent in the face of several revelations, such as the fact that the oil wells in Sabah will dry up six years from now. The issue has also been raised that Petronas ‘could go bust in 2018' forcing us to ask: Where have all the huge amounts of Petronas money gone to?
Has Petronas been managed so badly that despite it being the nation's biggest money-earner, it is now facing the possibility of going bust (bankrupt)? The first problem with Petronas is the fact that it was designed to be a secretive organisation.
The Petronas agreements have been classified secret. Why? What clauses are in the agreement that the people should know? This secrecy also include the secrecy of Petronas' detailed annual report which is shielded from public scrutiny, making it an organisation without public accountability.
The other shocking revelation that had came to my knowledge is that 80% of the oil produced by Petronas is not sold directly to the world market but is channelled through six 'option holders' who obtain the supply from Petronas at below market prices.
These option holder agents are the ones reaping the benefits in the oil price hikes. Who are these people? Why are there in the first place? Why has such a system been created for Petronas? Are these people, in fact, representing certain private interests?
It is also understood that this supply through the option holders is sold by contracts with a binding agreement for 20 or 30 years, causing huge losses for Petronas when oil price increases, as Petronas would then have to continue selling at the old agreed price.
Only 20% of Petronas's supply is sold through direct open bidding. Because of these arrangements, Petronas is sadly not maximising its revenue by dealing direct with the open world market. Instead, it has been incurring incalculable losses for the nation and for the people. How much this monstrous loss is, we will never know.
The members of parliament and the state governments should boldly raise up this very important issue in parliament or directly with the federal government for the benefit of the oil-producing states.
As soon as possible, leaders of the oil-producing states should seek for a review of the oil royalty rate and push for a differentiation of prices and benefits for the oil-producing states and the non- oil-producing states.
This review is being offered by the alternative government which is committed to giving the oil- producing states at least 20% oil royalty. This is a window of opportunity for all of us to demand for a review of the Petronas agreements, and to make Petronas more open and transparent. P
Parti Keadilan Rakyat also demands that the system of having the six option holders be abolished. A new system should be created in which the three oil-producing states are in control of the marketing arm of Petronas, to make Petronas trade directly in the world market with the aim of maximising revenue for the benefit of the nation.
Obviously, Petronas is a huge business organisation which is not accountable, secretive, and has been open to a lot of abuses, including the decision to use its revenue to bail out various individuals who faced bankruptcy as results of the Asian economic crisis ten years ago.
If the federal government truly wants to be responsible and accountable to the people as it claims it wants to be, it can begin to prove its sincerity for excellent governance by looking into the problems with Petronas.
The writer is PKR vice-president .