I've written a few times over the past few months that the Government is bleeding Petronas dry. For example, despite Petronas profits before tax dipping 50.7% for its first half of the financial year ending September 2009, Petronas will still maintain its record dividend payout of RM20 billion to the Federal Government this year.
Now we fear worse is to come with the unwelcome change at the helm of Petronas. Below is my comments to AFP on the change of guards.
Malaysia's opposition Friday accused the government of meddling in cash-rich energy giant Petronas after a new chief executive was named for the state-owned company.
The government announced on Wednesday that Shamsul Azhar Abbas, 57, would replace Hassan Merican, who has led the company since 1995. In a statement, it noted that Hassan's contract expires next Tuesday but gave no more explanation.
Analysts have lauded Hassan for his independence. Petronas -- Malaysia's only Fortune 500 company -- contributes almost half the country's budget revenues.
Its cash is all the more valuable after Malaysia last year ran up its highest budget deficit in 20 years, at 7.4 percent of gross domestic product, during the global financial crisis.
"The fear is that the wealth of Petronas is now at risk of further plunder by the government," opposition parliamentarian Tony Pua told AFP.
"There is fear that (Prime Minister) Najib Razak will arm-twist Petronas into providing more funds than Petronas can afford into funding the federal government," said Pua, who is from the Democratic Action Party.
The prime minister's office declined to comment to AFP.
But analysts at AmResearch said the company was in safe hands under Shamsul, formerly the chief executive of shipping giant and Petronas subsidiary MISC.
"We are positive on this development as Shamsul's extensive experience with Petronas should ensure that the group's strategies, direction and policies remain intact," AmResearch said in a report.
"This is vital given the group's thrust in further developing deep-water and overseas projects such as the four recent oil well concessions in Iraq," it added.
Petronas is part of a consortium led by PetroChina that has formally signed a 20-year deal with Iraq to develop the Halfaya oil field, which has proven reserves of about 4.1 billion barrels.
Petronas is also helping to develop offshore gas resources from the vast Sunrise field off East Timor.
10 comments:
This is a bigger problem than what you have outlined. If Omar Mustapha is the one calling the shots, the opposition will have a problem looking for problems in Petronas.
Have you met Omar Mustapha? He is no idiot. His scruples aside, he is no idiot.
This guy is pretty creative thinker. The stuff he makes up while its still looks better than real is difficult to find fault with. He is also a savvy deal maker and he may yet prove valuable in helping to grow Petronas.
If you are going after the stuff he does, you have to did deeper before you act or open your mouth..
LESSONS FROM COW & GOOSE
Let us all handle our 'cash cow' with care
If we don't want the kitty bank to be bare
Let us not kill the 'golden goose'
By allowing our expenses to be loose
(C) Samuel Goh Kim Eng - 060210
http://MotivationInMotion.blogspot.com
Sat. 6th Feb. 2010.
Forgive the ignorance of "green horns" at AmResearch. Yes, operationally and experience-wise - Shamsul is a suitable candidate. BUT...
does he has the "balls" to say NO to the PM & cronies from dipping their hands into Petronas coffers like Hassan Merican?
Being a cash rich company can be curse. Even in your own home if you have too much cash hanging around you wife and children will say ' papa why not we buy a bigger TV or why not we go the Lost World of Tabuan'. There are a million things that can be done if you have excess cash hanging around.
You have addressed the problem. But what is the solution? There are three solutions. 1. Processes. 2. Processes. 3. Processes. The rules of engagement for use of public funds have been emasculated in many Third World countries over the last 30 years. The horses have all bolted and I am afraid there may be no more horses to bolt except fron thr the PETRONAS Barn.
The recent financial and banking crisis led unprecedented increse in M3 all over the developed and developing world. There are fears that money itself may become toxic because of over supply and value may already be 1/2ed.And despite this massive intervention the economies as reflected by employment figures have remaind flat. The forecast is that perhaps by the year 2015 there may be some green shoots.
The developed countries have enough fat in their economies to absorb this shocks. But in the developing world the buzz word is Sovereign Default. Greece has already led the way. Many in the Third world will follow because we a clearly living beyond our means. The advent of sovereign Funding for infrastructure projects have botught on a new curse in the name of excess capacity. If you have not noticed in many resource rich countries the governments have gone on an orgy of projects sometimes at 5 to 10 time the actual cost. Venezuela is a case in point. Like the English Primere League which has been living beyond its means based on inflated projected goodwill value and TV revenue many Third World countries may face their respective financial demise and like Mgabe may have fasten their seat belts for an unprecendted removal of Zeros from national currency.
Is Hassan doing a lousy job? If not, why replace him?
Najib wanted a 'Yes' man, not a good businessman.
"The fear is that the wealth of Petronas is now at risk of further plunder by the UMNO government,"
this should be more precise. Let us call a spade a spade..
The question I would ask is why was Hassan not retained? Seems he is headed for another job. Politics is the reason for this. It reminds me of Datuk Tajuddin Ali leaving TNB some years back. Not pretty and also it reeked of politics, same for the removal of Ani Arope.
Omar Ong issue in itself was instructive - the PM wanted him there, and not because he was someone who could give Petronas any extra edge.
well, I am happy to read today that EPF is considering paying higher dividend for 2009 =)
~ ais
Hi, if you get the Petronas mean that you get half of the government fund of Malaysia, you may think a bit exaggeration... but do you agree?
Even Iskandar development region is control by them.
一朝天子一朝臣
Petronas is inevitably cast as 'the banker of last resort' because of depleting revenues and FDIs.
Everyone knows the consequences of relying too much on Petronas which depends on depleting oil reserves, but does our government has a choice?
We are known to take the easy way out of problems, are we expecting anything different from our present leadership?
If it is heading south, there is no way we can stop the tide without a change of government.
So far, the arrogance knows no bounds and you can scream all you can and they can just thumb their noses at you. Let's hope you and your colleagues in PR, will continue your untiring efforts to be ever vigilant in keeping them on their toes.
Even if unable to dislodge them, a strong opposition has shown the benefits of them trying to be nice to the people. That itself, is an achievement.
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