Tuesday, March 23, 2010

Jeffrey: Who are ‘six option holders’ in Petronas?

The veil of secrecy shrouding national oil company Petronas poses a challenge to Barisan Nasional’s claims of being responsible and accountable, according to PKR in Sabah and Sarawak.

Its chief Jeffrey Kitingan, in an open letter, has urged Prime Minister Najib Tun Razak to lift the veil and immediately review the oil royalty agreements with Petronas.

"I would like to raise several issues in regard to the situation in Petronas, which, I believe, most people are not aware of," he said in the open letter published in Sabah Progressive Party's website.

"This is especially pertinent in the face of several revelations, such as 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 problem with Petronas is that it was designed to be a secretive organisation. The Petronas agreements have been classified secret. Why?" Jeffrey asked.

'Incalculable losses'

"What clauses are in the agreement that the people should know? This secrecy also includes Petronas' detailed annual reports, which are shielded from public scrutiny, making it an organisation without public accountability.

"The other shocking revelation... is that 80 percent 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 below market prices. These option holders are the ones reaping the benefits in the oil price hikes.

"Who are these people?” asked Jeffrey

"Why are (they) there in the first place? Why has such a system been created for Petronas? Are these people 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 to Petronas when oil price increases as Petronas would then have to continue selling at the old agreed price.

"Only 20 percent of Petronas' supply is sold through direct open bidding.

"Because of these arrangements, Petronas is sadly not maximising its revenue by dealing directly on the open world market. Instead, it has been incurring incalculable losses for the nation and for the people.”

'Window of opportunity'

“How much this monstrous loss is, we will never know,” Jeffrey said.

"MPs should boldly bring up this very important issue in Parliament or deal directly with the federal government for the benefit of the oil-producing states.”

"Leaders of the oil-producing states should seek 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 ones.

"This review is being offered by the alternative government, which is committed to giving the oil-producing states at least 20 percent oil royalty,” Jeffrey said.

"This is a window of opportunity for all of us to demand a review of the Petronas agreements, and to make Petronas more open and transparent.

"PKR 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. This will 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 a result of the Asian economic crisis 10 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 Petronas."

by FMT

1 comment:

sir said...

Those who accuse must prove. Prove it.