For the last few days, I have been trying to figure out what exactly this oil “subsidy” is that the government is talking about, which it cannot tahan any longer and so it has to collect more money from the people.
What exactly is this “subsidy”? Everyone is talking about it without really knowing what this subsidy is all about.
Who is paying this “subsidy” to whom? I mean, actual cash payment. Is Petronas actually paying cash to anyone for this “subsidy”? Is the government paying cash to Petronas?
As a trained accountant, I hate to admit it, but I still don’t understand what this subsidy is all about. Aiyah, accountant cannot understand subsidy, susah-lah like that. Maybe it’s a good thing I am no longer working as one!
So last night I asked an experienced lawyer, “Who exactly is paying this subsidy to whom?” – and, guess what, he didn’t know either. This morning, I asked an operations director of a foreign multinational corporation, a trained engineer, the same question – and, guess what, he didn’t know either. I feel better now – the lawyers and engineers are equally confused!
But everyone is talking about this “subsidy” thing as if they know what it is all about. Is there anyone actually handing a cheque or making a bank transfer to anyone and saying, “Here, this is your subsidy payment”?
Of course, this subsidy could merely be a “notional subsidy” or “opportunity cost” – which would be the revenue that is being lost because the oil is being sold locally at less than the global market price. In other words, extra revenue that could have been earned – and put to good use – has been lost.
Let us remember that even at the old “subsidised” or discounted price, Petronas made more than RM40 billion in profit before tax for the half year to Sept 2007. So mana sakit? If Petronas can make huge profits based on the old prices, why the need to raise prices by 40 per cent at one go? (You want extra cash after squandering all our oil money in the past, izzit? Just say so.)
Being a major commodities exporter and net exporter of oil, the country should be flush with funds as a result of soaring commodity prices, no? How are other oil-producing countries able to offer lower oil prices for their people?
If you really need to increase the price to be closer to market price (to encourage conservation and to use the extra revenue to assist the poor), why not a gradual increase, spread out over a few months? Why the desperate urgency? Why disrupt the national economy and burden the lower-income group with one fell swoop?
If Petronas really needs more profits, why not start by raising the price of the natural gas that it sells to the Independent Power Producers, which have made massive profits over the years at the expense of Tenaga and the people? These IPPs are still getting a “subsidy” compared to other industrial users, even with the new higher prices.