Saturday, July 19, 2008

ABDULLAH BADAWI'S "VOODOO" ECONOMICS PART II



ABDULLAH BADAWI'S "VOODOO" ECONOMICS PART II
By Matthias Chang
Future FastForward





THE PETRONAS FLIP-FLOP

The Comedy of Numbers
It is a thankless job to be the Chairman and President of Petronas and the last few weeks must have been a nightmare for Tan Sri Hassan Merican. The job is made more difficult when the Finance Minister makes constant demands for a greater share of the profits to satisfy the greed of cronies regardless of the needs of the future generations.
In this article, I will produce official figures and statements and leave it to you, the reader to do the mathematics and draw the relevant conclusions.
Before proceeding further, please keep in mind that:
1) The financial year for Petronas ends on the 31st March of each year.
2) Also keep in mind that public companies are required to post quarterly results.
3) Therefore critical figures relating to loss and or profits are readily available and projections on earnings can be evaluated more accurately.
4) By May latest, the final figures would be apparent to Tan Sri Hassan Merican and the Finance Minister, give or take some minor adjustments when accounts are fully audited.
i) Petronas’ Profits
NST 16th July 2008:
On 16th July 2008 Petronas announced that net profit in the year ending March 31, 2008 jumped 31.5 per cent to RM61 Billion from RM46.4 Billion in 2007. Revenue was up 21.2 per cent to RM223.1 Billion. Hassan said despite a challenging year, the group had contained the impact of high costs and posted a 25.2 per cent increase in pre-tax profit to RM 95.5 Billion.
Tan Sri Hassan Merican was quoted as saying:
“We have performed quite well. This is a historic set of numbers for us… We have achieved exceptionally good financial results for this year. Furthermore, we don’t need that much to re-invest for the future. Therefore we are able to increase our dividend to the government.”
Petronas typically sets aside up to 35 per cent of its profits every year for it to invest in its business.
For the first time, Petronas will be paying a special dividend of RM6 Billion to the government, bringing total payments to RM67.6 billion. Petronas decided to pay the special dividend due to higher profits it recorded in fiscal 2008.
The RM67.6 Billion payments to the Federal government for the year represented 44 per cent of its revenue.
Since 1974, Petronas has paid the Federal government a total of RM403.3 billion.
ii) Announcement Made After Anwar / Shabery Debate
The debate took place on the 15th July 2008 at 9pm at the Dewan Bahasa Dan Pustaka.
Why the announcement now?
iii) Contrast & Compare Previous Statements
Why did Tan Sri Hassan Merican change his mind and gave so much of the profits to the Federal government?
Was he pressured to do so?
Before the price hike for petrol by 70 sen, Tan Sri Hassan Merican and Badawi were or should be aware of the profits of Petronas, as the financial year ended in March 2008.
But, in justifying the exorbitrant increase in the price of petrol, Tan Sri Hassan Merican and Badawi explained that both Petronas and the government could ill afford further subsidies. They were singing a totally different tune. I refer to the following news reports in our main stream media.
STAR, 6th June 2008
“Petronas could go bust by 2018”
“CEO: Profits can’t all go to subsidies”
Petronas will go bust within 10 years if all its profits are handed to the Government to continue subsidizing fuel, said its president and chief executive officer Tan Sri Hassan Merican.
Speaking at a special briefing on Petronas’ contribution to the country, Hassan said that in the oil business it was important to reinvest profits in search of new technologies, reserves and continued revenue. Petronas has so far reinvested RM178.9 Billion of its profits. Hassan also pointed out that it was now more expensive for Petronas to explore and extract oil.
“A lot of focus is placed on the high oil prices. There is very little talk about costs. The costs to explore and to drill for oil have increased by about 200% over the past three years.”
Hassan said Petronas was now “scraping the bottom of the barrel” as far as finding and extracting oil was concerned.
Yet, today the 16th July 2008, Hassan Merican said, “furthermore, we don’t need that much to re-invest for the future. Therefore we are able to increase our dividend to the government.”
NST 6th June 2008
The national oil company Petronas, which has paid the government about RM335.7 Bilion since its incorporation, now faces large rises in explorations at a much higher rate than the increase, in percentage terms, of oil prices.
Hassan was quoted as saying:
“We are scraping the bottom of the barrel. We are bringing up five million or ten million barrels… Gone are the days of 100 million barrels. When you continue to develop the smaller reservoirs, it is costly. When you go further and further away from the shore, it adds to the costs.”
Yet, today the 16th July 2008, Hassan Merican said, “furthermore, we don’t need that much to re-invest for the future. Therefore we are able to increase our dividend to the government.”
NST 15th June 2008
Hassan Merican was quoted as saying:
“Malaysia will be come a net importer when its domestic consumption, growing at six per cent per annum, is expected to overtake national production in 2011. But we will continue to produce oil for another 20 years or so.”
Hassan also dismissed the claim that Petronas stood to make money when the price of crude oil went up. On the contrary, he said, Petronas refineries could make less money or even incur losses as a result of higher feedstock costs, if crude oil price continue unabated.
So how do we explain his statement today:
“We have performed quite well. This is a historic set of numbers for us… We have achieved exceptionally good financial results for this year.”
“Petronas decided to pay the special dividend due to higher profits it recorded in fiscal 2008.”
The RM Trillion question is, Did Tan Sri Hassan Merican make a fool of himself in the light of the conflicting statements or was he arm-twisted to making the announcement to declare a further “special dividend”?
All I can say from the figures and statements above is that something stinks. There must be proper accounting and transparency in the way Petronas’ monies are being allocated and used.
While some of you may have confidence in the manner in which our economy is being managed by Badawi, as far as I am concerned, this is another example of Voodoo Economics!

tunku : it's all about badawis's survival.

3 comments:

Conspiracy Theorist said...

YM,

Wat we dun realized is PLah is resorting to blackmailing most of d ppl in d govt..jst a wild gess wth strong possiblities as thr are whispers goin aroun..d executioner is KJ.. wat can I say..heheh..(,")

SAY NO TO NWO!! SAY BYE TO AnWar!!

Fac me cocleario vomere!

Anonymous said...

What ever results what ever promises, People want to see real economics on the GROUND. Hyper Cost rising the next few months will sink in to many households, i had friends now borrow money few hundreds ringgit also not $ to pay back. few no money to buy rice...What is going on? Cash flow management is the key to survivor.

Traffic Jam for unneccessary precautions had irritate people feeling across KLANG Valley. These people are the thinkTank of country economic and commercial drivers, their frus. , thinking and feeling and their actions could be FAR serious and killing than politician decisions.

People start to talk ' WTF'

Anonymous said...

why does Pak Lah still need to "fight for his survival" though? now that his stepping down plan is out in the open, knowing too the level of criticism he's already under, he has no need to be a people pleaser anymore what.