Monday, June 30, 2008
Sunday, June 29, 2008
Saturday, June 28, 2008
Thursday, June 26, 2008
Wednesday, June 25, 2008
Many Malaysians have fallen victims to the mud-racking campaign of former Prime Minister Mahathir Mohammad.They forgot that Mahathir had 22 years whilst Abdullah had only less than 5 years so far and under very trying conditions.
Many of us have forgotten that when Mahathir first came to power he was also a green horn in the world of commerce and had experimented with all sorts of things.His 'Look East' policy and his dreams of building Malaysian version of the Japanese model of the 'sogo sosha' was a complete failure costing taxpayers millions of ringgits and his close friend Abdullah Ng in prison for criminal breach of trust.How many financial scandals and bank failures were there during his time? How many bail-out were there using Petronas money?The BMF scandal that ended up with the murder of a bank officer and the bail-out of Bank Bumiptra was during his time.The steel mill Perwaja which was losing huge amount under bumiputra management which he eventually handed over to his good friend Eric Chia whom he thinks is a wiz-kid and can do a better job, eventually lost even more money through corruption.Eric Chia was charged and brought to court for corruption.He was later acquitted of the charge.It was reported Chia died yesterday morning in his sleep at his own hotel.
Sunday, June 22, 2008
The letter was authored by an employee of Petronas who took it on himself to clarify the actual position and the inner workings of the organisation to counter the myth about the company.
I leave it to my readers to decide the veracity or mendacity of the story.
After reading all the chain mails and blogs, I feel called to reply, because of the relentless attacks and allegations -- most of which are inaccurate or baseless -- against PETRONAS.
PETRONAS' STAFF SALARY & BONUS
1) The salaries paid to PETRONAS' employees are not as high as people think. At best, they are just industry average. And these are not attractive enough for some who left PETRONAS to find work at other companies (mainly from the Middle East) which are willing to pay more. Why do they pay more? The oil and gas industry worldwide has been facing acute shortage of qualified or experienced personnel, so most companies are willing to pay lots of money to entice and pinch staff from their competitors.
Bonus? There has NEVER been a bonus amounting to 6 months or 12 months throughout the 33 years. On average, it is 2 months. But don't ever think we don't deserve it. We more than deserve it. A lot of us work really hard, some in the most extreme of conditions. Those who have been to and worked in northern Sudan, for example, would testify that it's like working in a huge blower oven. Southern Sudan, on the other hand, is almost all swamps and mud. Imagine having to go through that kind of heat, or waddling in muddy swamps, day in and day out.
QUALITY OF CRUDE & REFINED PRODUCTS
2) Malaysia produces about 600,000 barrels of crude oil per day (and about 100,000 barrels condensate). Of this crude volume, 339,000 barrels are refined locally for local consumption. The rest is exported (and yes, because it has lower sulphur content it fetches higher prices).
Malaysia also imports about 230,000 barrels of crude oil per day, mainly from the Middle East, to be refined here. This crude oil contains higher sulphur and is less expensive (so the country gains more by exporting our crudes). In Malaysia, this crude is processed by PETRONAS at its second refinery in Melaka, and also by Shell at its Port Dickson refinery.
Different refineries are built and configurated to refine different types of crude. And each crude type yields different percentage of products (diesel, gasoline, kerosene, cooking gas etc) per barrel.
But most importantly, products that come out at the end of the refining process have the same good quality regardless of the crude types. That's why PETRONAS, Shell and Exxon Mobil share the same pipeline to transport the finished products from their refineries to a distribution centre in the Klang Valley. The three companies collect the products at this centre accordingly to be distributed to their respective distribution networks. What makes PETRONAS' petrol different from Shell's, for example, is the additive that each company adds.
PETRONAS' ROLE, FUNCTION & CONTRIBUTION
3) A lot of people also do not understand the role and function of PETRONAS, which is essentially a company, a business entity, which operates on a commercial manner, to mainly generate income and value for its shareholder. In this case, PETRONAS' shareholder is the Government.
In 1974, when PETRONAS was set up, the Government gave PETRONAS RM10 million (peanuts, right?) as seed capital. From 1974 to 2007, PETRONAS made RM570 billion in accumulated profits, and returned to the Government a total of RM335.7 billion. That is about 65% of the profits. That means for every RM1 that PETRONAS makes, 65 sen goes back to the Government.
Last year, PETRONAS made a pre-tax profit of RM86.8 billion. The amount given back to the Government (in royalty, dividends, corporate income tax, petroleum products income tax and export duty) was RM52.3 billion. The rest of the profit was used to pay off minority interests and taxes in foreign countries (about RM7.8 billion - PETRONAS now operates in more than 30 countries), and the remaining RM26.7 billion was reinvested. The amount reinvested seems a lot, but the oil and gas industry is technology- and capital-intensive. Costs have gone up exponentially in the last couple of years. Previously, to drill a well, it cost about US$3 million; now it costs US$7 million. The use of rigs was US$200,000 a day a couple of years ago; now it costs US$600,000 a day.
A lot of people also do not realise that the amount returned by PETRONAS to the Government makes up 35% of the Government's total annual income, to be used by the Government for expenditures, development, operations, and yes, for the various subsidies. That means for every RM1 the Government makes, 35 sen is contributed by PETRONAS.
So, instead of asking what happens to PETRIONAS' money or profits, people should be questioning how the money paid by PETRONAS to the Government is allocated.
CRUDE EXPORTS & FUEL PRICES
4) A lot of people also ask, why Malaysia exports its crude oil. Shouldn't we just stop exporting and sell at cheaper prices to local refiners? If Malaysia is an oil exporting country, why can't we sell petrol or diesel at cheaper prices like other oil producing countries in the Middle East?
I guess I don't have to answer the first couple of questions. It's simple economics, and crude oil is a global commodity.
Why can't we sell petrol and diesel at lower prices like in the Middle East? Well, comparing Saudi Arabia and other big producers to Malaysia is like comparing kurma to durian, because these Middle Eastern countries have much, much, much bigger oil and gas reserves.
Malaysia has only 5.4 billion barrels of oil reserves, and about 89 trillion cubic feet of gas. Compare that to Saudi Arabia's 260 billion barrels of oil and 240 trillion cubic feet of gas.
Malaysia only produces 600,000 barrels per day of oil. Saudi Arabia produces 9 million barrels per day. At this rate, Saudi Arabia's crude oil sales revenue could amount to US$1.2 billion per day! At this rate, it can practically afford almost everything -- free education, healthcare, etc, and subsidies -- for its people.
But if we look at these countries closely, they have in the past few years started to come up with policies and strategies designed to prolong their reserves and diversify their income bases. In this sense, Malaysia (and PETRONAS) has had a good head start, as we have been doing this a long time.
Fuel prices in Malaysia is controlled by the Government based on a formula under the Automatic Pricing Mechanism introduced more than a couple of decades ago. It is under this mechanism that the complex calculation of prices is made, based on the actual cost of petrol or diesel, the operating costs, margin for dealers, margin for retail oil companies (including PETRONAS Dagangan Bhd) and the balancing number of duty or subsidy. No retail oil companies or dealers actually make money from the hike of the fuel prices. Oil companies pay for the products at market prices, but have to sell low, so the Government reimburses the difference -- thus subsidy.
Subsidy as a concept is OK as long as it benefits the really deserving segment of the population. But there has to be a limit to how much and how long the Government should bear and sustain subsidy. An environment where prices are kept artificially low indefinitely will not do anyone any good. That's why countries like Indonesia are more pro-active in removing subsidies. Even Vietnam (which is a socialist country, by the way) is selling fuel at market prices.
PETRONAS & TRANSPARENCY
5) I feel I also need to say something on the allegation that PETRONAS is not transparent in terms of its accounts, business transactions etc.
PETRONAS is first and foremost a company, operating under the rules and regulations of the authorities including the Registrar of Companies, and the Securities Commission and Bursa Malaysia for its listed four subsidiaries (PETRONAS Dagangan Bhd, PETRONAS Gas Bhd, MISC Bhd and KLCC Property Holdings Bhd.
PETRONAS the holding company produces annual reports which are made to whomever wants them, and are distributed to many parties and places; including to the library at the Parliament House for perusal and reading pleasure of all Yang Berhormat MPs (if they care to read). PETRONAS also makes the annual report available on its website, for those who bother to look. The accounts are duly audited.
The website also contains a lot of useful information, if people really care to find out. Although PETRONAS is not listed on Bursa Malaysia, for all intents and purposes, it could be considered a listed entity as its bonds and financial papers are traded overseas. This requires scrutiny from investors, and from rating agencies such as Standard & Poor and Moody's.
6) The last time I checked, this is still a democratic country, where people are free to spend their money wherever they like.
For those who like to see more of the money that they spend go back to the local economy and benefiting their fellow Malaysians, perhaps they should consider sticking to local products or companies.
For those who like to see that the money they spend go back to foreign shareholders of the foreign companies overseas, they should continue buying foreign products.
FINAL WORD (FOR TODAY)
I'm sorry this is rather long, but I just have to convey it. I hope this would help some of you out there understand something. The oil and gas industry, apart from being very capital intensive, is also very complex and volatile. I'm learning new things almost every single day.
Appreciate if you could help to forward this response to as many contacts as possible to counter the subversive proposal out there.
Tan, Boon Hua
Peninsular Malaysia Gas Fields Development Project
PETRONAS Carigali Sdn Bhd
Level 17, Tower 2
PETRONAS Twin Towers,
KLCC 50088 Kuala Lumpur
Tel : +603 - 2331 9307
Fax : +603 - 2331 5633
E-mail : email@example.com
Saturday, June 21, 2008
It is now confirmed that the President of SAPP Yong Teck Lee is going for broke.It is now a matter of make it or break it.
He said it was the Supreme Council decision to support a vote of no confidence against Prime Minister Abdullah Ahmad Badawi to be tabled on Monday and Anwar Ibrahim has acknowledged that he has now 2 more MPs in his pocket.
However, SAPP Deputy President Raymond Tan said it was totally wrong for Yong to say it was an unanimous decision, not all Supreme Council members agree, there were opposing views.
Tan who is Deputy Chief Minister and Au Kam Wah, the Assemblyman for Elopura walked out of the conference room and said he wouldn't have walked out if he was in agreement with Yong.He said Yong just wanted everybody to agree with him without giving others a chance to express their views.
Some sources say Yong has planned this and is doing it partly to gain sympathy from the Chinese community as he had earlier been informed by those in the SLDB corruption case that one of the accused would mention his name in court as one of the recipients of commissions from the illicit sales of SLDB shares, making it looks like he is being victimised by Abdullah. The timing was perfect and it was a very clever move on his part as most Malaysians would believe him rather than Abdullah,whose popularity is at the lower end of the scale at the moment.
Yong's scintillating performance includes waiting to be sacked which will get him more sympathy from the people. In Malaysians politics and more often than not sympathy always go to the underdogs.
Although the motion of no confidence has little chance of getting through, Yong's MPs must introduce it to make sure they are sacked from the BN, to enable them to switch side to Anwar's Pakatan Rakyat.Since the failure of the motion is imminent there is no need to speculate on how DAP and PAS going to vote, as both parties have stated their principle against party hopping.
It is not known yet how many SAPP elected representatives will ditch the party as a show of protest against the decision.
Politic is not a scientism that has hard-and-fast rules, anything can happen.
Thursday, June 19, 2008
The President of SAPP, Yong Teck Lee has announced that either one of his two MPs would initiate a vote of no confidence against Abdullah when Parliament re-convene on Monday but said SAPP will remain in the BN and would let the BN decides on its fate.
This will be the first time in Malaysian history an attempt to remove a Prime Minister and a sitting government through vote of no confidence in Parliament.
Is Yong going for broke ? It appears so.
It may be a foregone conclusion that most of the opposition MPs,if not all, will support the motion.Without the support of additional MPs from BN the motion may not go through.Yong needs the support of at least 30 MPs from BN to throw Abdullah our if he already has 100% support of the oppositions.It is rumoured that PAS MPs may not participate in it.
It is common knowledge in Sabah that Yong was angry with the PM for not giving him the Sandakan parliamentary seat to contest under SAPP in the recent General Elections.The seat was given to LDP, a rival party once headed by his archrival Chong Kah Kiat, whom Yong has long standing feud with.Both were vying to be the accepted Chinese leader when Chong was still the President of LDP.
All the hullabaloo about illegal immigrants issues are just excuses.This problem has been there since Mustapha's time.Mahathir has been there for 22 years and Yong was thick in the government with him and was Chief Minister under him.Why didn't he fight tooth and nail with Mahathir to resolve the problem then?
He could have done what he accused Abdullah of not doing now when he was Chief Minister and the more powerful Mahathir was Prime Minister, who had no qualms about sending political opponents to prisons but are not prepared to send illegal immigrants away from this country.It showed that when he was in that chair Yong forgot there was a serious illegal immigrants problem in the state.
Yong also forgot there were allegations of a Project M, whatever that meant, where illegal immigrants were issued with Malaysian identity cards and allowed to vote.Some of those voters voted for him when he stood for election in the constituency that covers Likas and Pulau Gaya where thousands of this kind of voters are found.Did he complain?
Every chief minister of Sabah has failed the people on this issue but at least most of them don't go around pretending to champion the cause after they were no more in office and used it as an excuse to challenge the leadership.Leaders like him should have the guts and do the honourable thing, ask his MPs to resign and challenge the government to a by-election and prove it that he and his party have the people's support.
The illegal immigrants problem started with former Chief Minister Mustapha, with the blessings of the Federal govenment then, allowing Filipinos from the southern Philippines to enter Sabah as refugees.
During Mustapha's time no Malaysian identity cards were ever issued to them, they were given UN approved status as refugees and issued with documents known as IMM 13. The issuance of Malaysians identity cards,geniune or otherwise, can be traced to the days of Berjaya and has now exploded to unimaginable proportion.
After the fall of Berjaya, Yong played active part in politics in Sabah from being a deputy chief minister during PBS time to a chief minister under the BN and he had every chance to pursue his very noble cause of getting rid of illegal immigrants from Sabah.Former Chief Minister Chong Kah Kiat tried and failed miserably because the Federal government didn't play ball with him and at that time the all-powerful Mahathir was Prime Minister.
All previous prime ministers and chief ministers had failed the people of Sabah to provide them security and protection from the 'enemy in the midst'.None have been sincere to tackle the problem once and for all.Sabahans are now refugees in their own land because of greedy politicians like Yong and the rest of them.
What makes Yong thinks if all the previous prime ministers couldn't do what he wanted them to do, Badwai can do miracles and resolve the problem instantaneously.
I am sick to the bone listening to such pathetic and shameless talk of politicians who are rotten to the core with personal greed and pretend to champion the rights of Sabahans.
Yong is a political animal, he truly believes Anwar Ibrahim would be the next prime minister and he is preparing himself to jump on the next bandwagon and on to the next gravy train.
It's nothing but a sham and political blackmail.
"The Monkey King" is a renowned classical Chinese novel written by Wu Cheng-en .The Chinese name for the novel is "Jouney To The West".
Tuesday, June 17, 2008
With so much talk about Anwar taking over the government soon, it got me pondering the past weeks on how he is going to get around doing this rather difficult task and whether I should have this polemic on my blog and infuse a nuclear meltdown among Anwar's impervious supporters and suffer the aftermath of a nasty fallout.
I think I shall take my chances and let it be. After all I wouldn't be getting physical blows from those scurrilous guttersnipes, maybe, at worse a busted ego which evanescent rather quickly to do any harm to my aged faculty.
The jungles of the worldwide web are full of spins,spins,spins and just about everyone with access to the internet are spinning something or another.They see it as their job to needle,poke,manipulate and dissect politicians with some having no qualms about spreading rumours, disinformation and innuendo as one guttersnipes called 'george k' did when he came to this blog and smeared my nice clean white sheet with his shitty dirty fabricated story of 'slush' accounts of our former prime minister and his family thinking I would easily fall for his ruse and posted that heap of rubbish on my blog.
Despite all those earnest declarations by Anwar of him taking over the government latest by September this year there seemed to be something missing in his calculations of what he called "we have the numbers". There appears to be no logical progression to those numbers under the present circumstances.
Anwar may have to wait until the next elections to try capture the federal government.His sudden realization that it would be almost next to impossible for him to takeover the government this term unless there is a big exodus from almost all of the non-UMNO(United Malay National Organisation) and PBB components of the BN(Barisan Nasional)
The biggest stumbling block for him would be MCA(Malaysia Chinese Association) and PBB(Parti Bangsa Bersatu) in Sarawak who are not likely to switch camp at this moment. That's why he has changed his tune by saying that some lawmakers from MCA are going to join his Pakatan Rakyat. Without the full thrust of MCA and those from Sabah and Sarawak, he wouldn't have a chance of taking over the government.He may get only some of those from Sabah and Sarawak and, maybe, some from MCA, but wouldn't be enough to grab the trophy from Abdullah.It is not as easy as many of us would like to think.
With the exception of Yong Teck Lee of SAPP, the other leaders in the BN components may not want to jeopardise their already well-rewarded positions. Only those who has not worked out the risk factor and those disgruntled or has nothing to lose would cross over to Pakatan.
The maximum he could get from Sabah and Sarawak would be from the non-UMNO and non- PBB lawmakers which at best can only give him 11 from Sabah and 16 from Sarawak getting a maximum of 26, not enough to form a simple majority. Without massive defections from MCA he has very little chance of taking over the government.
MCA has 15 parliamentary seats , MIC 3 and Gerakan 2.He has to take at least two-thirds of those seats including the 11 from Sabah and 16 from Sarawak to have a comfortable majority.It is not going to be an easy task for him as he has made it clear,unless it is spuriously a lie, he is not offering any monetary benefits or positions to those who wish to cross over.
Politics in Malaysia and elsewhere is all about money, positions and status.Even those who started with a noble value would eventually ended up licking their expired nobility.It would be likened to 'looking for a needle in a haystack' to find a politician with strong conviction to only serve the people and nation and Anwar should know this, he came from the same political school.
Would MCA get better treatment if it joins PR(Pakatan Rakyat) with arch rival DAP who has 28 seats compared to MCA 15? assuming MCA moved over en-bloc.With the two tigers in DAP, Karpal Singh and Lim Kit Siang, MCA would be food for the tigers.
The political landscape would take a drastic and scary change if MCA and all the other non-UMNO parliamentarians crossed over to Pakatan Rakyat. It would be completely new dawn in Malaysian politics and the end of 'ketuanan Melayu' that our former Prime Minister Mahathir Mohammad kept reminding the Malays to safeguard.
Below would be the scenario if Anwar can successfully wrestles the federal government from Abdullah on the assumption that no UMNO and PBB parliamentarians joined in the crossover.
Pakatan Rakyat new profile:
That would give him 129 seats, just enough to form a weak coalition and for the first time a government without Malay majority, a true Bangsa Malaysia government widely espoused by Pakatan Rakyat and many of my fellow bloggers.
Unless Anwar has other formula he would have to be patient and wait his time until the next elections to have a go again at the coveted title.
The above scenario is based on UMNO and PBB not losing any of their parlimentarian to the crossover and would stay as opposition until the next elections.
Another scenario that may not be too far-fetched is the making of a new and more powerful all-Malay coalition comprising UMNO, PAS, PKR and PBB with 147 seats in Parliament.
On the question of offering Sabah 20% royalty whether the Prime Minister is empowered to change the rate of royalty payment to oil producing states without making amendments to the 'Petroleum Development Act' I have absolutely no idea.
Section 7 (which appears below) of the Act seems to empower the PM authority over certain things but had no mention of the royalty rates to the states.
Section 7:Power to make regulations
7. The Prime Minister may make regulations for the purpose of
carrying into effect the provisions of this Act and, without prejudice
to the generality of the foregoing, such regulations may, in particular,
(a) the conduct of or the carrying on of—
(i) any business or service relating to the exploration,
exploitation, winning or obtaining of petroleum;
(ii) any business involving the manufacture and supply
of equipment used in the petroleum industry;
(iii) downstream activities and development relating
(b) the marketing and distribution of petroleum and its products;
(c) penalties in the form of a fine not exceeding one hundred
thousand ringgit or imprisonment not exceeding five years
or both for breach of any of the regulations and for noncompliance
with any term or condition of any licence,
permission or approval issued or granted under the regulations;
(d) the forfeiture of anything used or intended to be used in the
commission of any such breach or non-compliance.
If the power to change the rate of royalty payment is not included in the above section than Anwar can only effect the change by amendment to the 'Petroleum Development Act', which would need two-thirds majority in Parliament, which he wouldn't have.
Unless such power is granted under the following section:
Section 4:Cash payment by the Corporation
4. In return for the ownership and the rights, powers, liberties
and privileges vested in it by virtue of this Act, the Corporation
shall make to the Government of the Federation and the Government
of any relevant State such cash payment as may be agreed between
the parties concerned.
Now I understand why Abdullah and Najib are not the least bit shaken or worried about Anwar's claims.
Monday, June 16, 2008
Tengku Razaleigh revelation that a component party of BN might be leaving the coalition before the end of this month have many people guessing.It may not be too difficult to identify the party concerned .
Speculation is rife that the SAPP may be the party that is going to ditch the BN due to unhappiness of its President Yong Teck Lee with Abdullah Badawi's inaction to the grouses of Sabahans on the thorny issues of illegal immigrants, cooking oil subsidy and hosts of other problems effecting the state.
Was Yong's concern for Sabah sincere or it is just an excuse to 'tukoran bankad' (changing shirt) to fulfill his own personal agenda?
SAPP is not the sole Chinese-based party in Sabah and Yong couldn't claim to represent the whole Chinese community in the state. LDP, another Chinese-based party formerly headed by Chong Kah Kiat has 3 state seats and 1 parliamentary seat.Peninsula-based MCA holds another state seat.
Yong's rumbling of discontent for the past few weeks and his ultimatum to Abdullah to resolve the issues by August is seen as a precursor to SAPP leaving the BN and stimulus for Anwar to launch his machinery to take over the federal government through a vote of no confidence against Abdullah which at this moment look impotent unless there is a big exodus of lawmakers from Sabah and Sarawak or the Peninsula joining Pakatan Rakyat.
Abdullah imperious treatment of Sabah and Sarawak after the 8th March General Elections has transformed the massive support for the BN into anger and disillusionment for the people of the two states, Sabah in particular because of its excellent contribution to the victory of BN.
This would be the second time Yong parted ways from political expediency. In 1994 he defected from PBS to form SAPP which was later accepted into the BN.
Would Yong and SAPP join Anwar or would he goes into political oblivion if Anwar failed to secure the federal government?
For a minuscule party like the SAPP pointing gun at the Prime Minister's head may not be a wise move.
Saturday, June 14, 2008
"I am sick and fed up of judges who have no guts to speak up when in office and to live up to their oath of office.
Judges demand an independent judiciary but are unwilling to make sacrifices to ensure its independence. It is such silence in the face of such outrageous misconduct by a fellow judge that confirms the public’s perception that judges are opportunists and cowards.
Why make spurious allegations now and not before?
The problem of the judiciary is to be found within the judiciary. Don’t blame third parties for your sordid state of affairs!"
Those are words of Matthias Chang, the ever faithful and obedient sidekick of the former prime minister.
He said Justice Datuk Ian Chin must be sacked for conduct unbecoming of a judge and prosecuted for sedition and contempt.
He and the ex-premier son Mukhriz lamented that Justice Chin should have brought up the matter when Mahathir was still the Prime Minister.
He is definitely faithful to the former prime minister and goes out or his way to defend him and what is even more amazing he, like his former boss, is calling for a tribunal to remove Justice Chin.Didn't that sound familiar and similar to what happened in 1988 when Tun Salleh Abas was sacked by a tribunal.
It was common knowledge that the Agong at that time before he ascended the Johor throne had been prosecuted by Salleh Abas when he was public prosecutor, convicted of homicide and sentenced to six months in jail.It didn't make life too difficult for Mahathir to get what he wanted.
Brought up the matter when Mahathir was still the PM ? Mukhriz is either joking or pretended not to know what kind of a man his father is.
Does Matthias thinks judges should suffer in silence and not speak out if there were injustices against them.What would have happened to Justice Chin if he had spoken when Mahathir was still the PM ? It wouldn't be too far-fetched to assume that a tribunal would have been the answer to Justice Chin's revelation.
Matthias was wrong when he says there was public perception that judges are opportunists and cowards.The only public perception of judges that I know of are that some of them (not all) are corrupted.
Matthias appealed to fellow Malaysians not to pay heed to the sideshow and said " You may have noticed by now, that whenever the Badawi Regime has a crisis eg. The UMNO crisis following the General Election disaster and now the oil price fiasco, the Badawi spin doctors would attempt to divert your attention with allegations against Tun Dr. Mahathir Mohamad.
This happened just before the General Elections with the setting up of the Royal Commission and the wild allegations against Tun Dr. Mahathir Mohamad.
This is another side show to throw your mind and anger away from the oil price hike to a non-issue by a frustrated old Judge who cannot even lie properly. This judge is angry because he covets the post of Chief Judge of Sarawak and Sabah. He cannot understand why Tan Sri Richard Malanjun was promoted to the post instead. He blames the former prime minister but he care not to examine his infantile behaviour. And now, the desperate politicians are taking advantage of his stupidity for their political ends!
Don’t fall for this insidious tactic of the Badawi Regime and the blogs and websites fronting for Anwar Ibrahim".
Matthias, like master, like man has thrown a challenge against the Honorable Judge and said
"In the circumstances, I call upon this disreputable judge to an Open Public Debate on the issues raised in his Open Court Statement within a week from the date hereof.
If he refuses, I am calling him a coward, a liar and a man unfit to continue in office as a judge.
And I challenge him to hold me in contempt of his court in making this challenge!
And I am warning Justice Datuk Ian Chin that I intend to lodge a police report against him on his unfounded allegation on the expiry of my notice to him to accept my challenge!
The courage of Justice Datuk Ian Chin’s convictions will be tested by the courage of my convictions!"
Justice Ian Chin is known for his high integrity and had no reason to lie and would not benefit from such histrionics. I wouldn't want to speculate on the two judges who didn't hear what was being said by Mahathir at that time.
From my experience attending conferences before, I found it is normal for some people, young and old, to fall asleep while the speaker is delivering his speech.Most of the time it is out of boredom and made worse if the speaker is not articulated.Justice Chin said it was a thinly veiled threats which possibly was not picked up by the other two judges.
I am certain Justice Chin will not allow himself to be used by politicians.
Matthias is seeing ghosts from the past.
You can read his full article here.
Tuesday, June 10, 2008
Many governments have to face the unpleasant fallout of the fuel crisis with prices of goods spiralling out of control festering discontent and labour unrest in the country.
In Spain and France thousands of truckers blocked roads over the rising prices of petrol and diesel.In Portugal and Spain long queues formed at supermarkets for fear of shops running out of fresh food due to truckers strike.The story were the same at petrol stations where long lines of motorists were waiting to fill up.In Madrid around 15% of petrol stations were dry a few days ago.
French truck drivers joined the protest and sealed off their side of the border and gridlocked with a go slow that caused 20 miles of tailbacks.In Britain 300 lorries are expected to converge on central London on 2nd July to protest the high price of fuel.There were protests and demonstrations in other parts the world over the high prices of petrol and diesel. Most governments have no choice but to increase prices.
Experts warned that the escalation in price has not ended and may climb to US$200 per barrel if there were no drastic reduction in consumptions.With the exception of OPEC members who can provide cheap fuel to the people, other countries including those highly developed economies, are worried that keeping the price low through subsidies would encourage consumers not to conserve and would lead to wastage and further price escalation and more money flowing to oil-producing countries with serious negative impact on the global economy.Increased consumption and some speculations had been the reasons behind the sharp rise in price.
Was speculation the cause of the unstoppable rise in the price of crude oil? Not so according to Adrians Binks of Argus Media Group, the largest independent energy news and price reporting agency.Binks may be right to certain extent but may not be exactly on the dot.Any commodity with futures market will attract some form of speculation and crude oil has futures for hedging just like many other commodities and would definitely attract some speculators with big appetite for big bucks.
One lucky investor who had, after a lot of research and a lot of thinking, eleven years ago decided that the long decline of oil price in the 1980s was about to end and acted on his conviction.Richard Rainwater of Texas plunked down $300 million of his own money on energy-company stocks and oil and gas futures.At the end of 1998 , the price of oil fell below US$10. per barrel and petrol sold for 90 c per gallon. Rainwater was getting poorer by the day while the Internet and dotcom were making billionaires.Then the dotcom bubble bursted and the price of oil climbed,climbed and climbed.A few weeks ago when the price of oil was at $129. Rainwater liquidated all his energy stocks and netted US$2 billion.He rises from No. 200 on Forbes 400 richest to No.91 with net worth of US$3.5 billion.
In the United States where people are more adapt to changing oil prices and are quick to change their lifestyle, the price of petrol hit the $4.00 per gallon or $0.95 per litre two days ago.Many Americans have abandoned their gas-guzzling SUVs in favour of smaller fuel-saving vehicles.The sales of SUVs and big capacity engine are expected to fall drastically in favour of hybrid and smaller cars.
In UK the price of petrol is around 117.9 p per litre, one of the highest in Europe. To top up a full tank,depending on size of cars, one would require between 100 to 130 pounds.For many Malaysians that's two-month petrol bill.
The most amazing country is Norway, the third largest exporter of crude oil in the world also has one of the highest price of petrol and diesel in the world.Its exports around 3 million barrel of crude oil per day.Since the discovery of oil and gas in the 1960s the country has been saving it oil and gas budget surpluses in a Government Petroleum Fund invested overseas now valued at over US$300 billion which is a whopping RM990 billion at current exchange and is still growing.Conservative estimates predicted the funds may reach US$800-900 billion by 2017.It is a net external creditor and has the second highest per capita in the world at US$53,037. (IMF).A nation once dependent only on its fishing industry and shipping fleet is now the richest nation on earth due to its prudent financial management and a government that stays clear of corruption.
Malaysians who used to be pampered by subsidised petrol and diesel were shocked and angry when the government announced a hefty increase in the prices of petrol and diesel last week. Long queues at petrol stations were seen throughout the nation as motorists rushed to top up their tanks before the midnight dateline.There were huge public outcry accusing the government of Abdullah Badawi as being uncaring and irresponsible.The oppositions political parties and former Prime Minister Mahathir Mohammad were quick to jump on the bandwagon and sent a flurry of attacks on Abdullah. Small and peaceful street protests were seen in the capital city, Kuala Lumpur.
The much touted prime minister in waiting Anwar Ibrahim said the price hike has made the prospect of Pakatan Rakyat taking over the federal government looking much brighter than before and oil price will be reduced as soon as Pakatan took over the government.He also said they will reduce the pump price for petrol even if the price of crude went above US$200 per barrel.
A very brave promise indeed, how is he going to do it and for how long is one big question mark.Is he a man of many words and would have little to offer when the time comes.I dreaded the day Anwar become prime minister and failed in his promises to the Malaysian people in general and Sabahans in particular.Say I am a pessimist but I can't foresee Anwar being able to deliver what he promised the Sabahans. You can't just give Sabah the 20% and ignore the other two states,Sarawak and Trengganu.
With the current price of oil Sabah would become a very rich state if it gets 20% royalty.Let's assume the production from Sabah is around 300,000 barrels per day.At current price of US$130 bbl the total sale a day would be US$39 million and annual gross sale of US$14.23 billion and at 20% on gross sale Sabah would be getting US$2.84 billion in royalties and at current exchange rate it worked out to be RM9.37 billion annually.
Malaysia consumes about 530,000 bbl/day of crude oil.Assuming the volume of petrol and diesel obtained after refining is 60%, its daily consumption is 50.5 million litre a day (see conversion table below).
If Anwar brings the price of petrol and diesel down to its former level of RM 1.92 and RM1.58 per litre respectively and at consumption of 50.5 million litre a day, the Malaysian government would have to fork out subsidy at various level as shown below:
Unit---- Per-------- Per
Sub---- Day --------Annum
sidy---- RM --------RM
1.00---- 50.5 million 18.4 billion
1.50---- 75.7-------- 27.6
2.50--- 126.2------- 46.0
After the recent price increase the government would still be subsidising about RM1.50 per litre which is around RM27 billion a year.
The consolidated profit of Petronas for the year ended 31 March 2007 was RM46.4 billion and shareholder's fund stood at RM170.9.Where is Anwar going to get his money to subsidise fuel to make fuel thirsty Malaysians happy.
The total Malaysia budget for 2008 was RM176.9 billion.Abdullah expects the budget deficit to narrow down to 3.1 % for the year.With higher energy price there would be some contraction in GDP growth in 2008 where manufacturers have to struggle with higher costs of production due to higher energy costs.
He boldly says he would continue the subsidy even if the price is above US$200 a barrel.A smart man that many Malaysians are very much in love with but who cares not about the nation as long as he stays popular. If the price of oil were to be at US$200 per barrel, it would roughly costs US$1.26 or RM4.10 to buy a litre of crude before adding cost of freight and refining costs.Has Anwar any idea what would be the eventual cost of the refined products.A table below shows the main products and other derivatives that a barrel of oil produces. Anwar promise could just be a pie in the sky.His act of mendacity to the Malaysian people is just abominable.
The lightning increase in the price of crude had taken many governments by surprise where the fundamentals of economic forecasts have gone out of the window leaving government planners flustered and in disarry.
The increases in price of petrol and diesel(2004-2008) in Malaysia is shown in the table below:
There were gradual increase between May 2004 and February 2006. The drastic increase between Feb 2006 and June 2008 was probably due to the sharp increase in the price of crude during the same period.
Between Feb 2006 to Oct 2006 the price of crude was fluctuating between US$54-68, breached the US$100 in April 2008 and climbed to over US$130 in May/June 2008.The government should have done one adjustment between Feb and Oct 2006 and a second adjustment in June this year.
Anwar wanted his Pakatan Rakyat to take over the federal government, if possible, through the back door.
Take a look at his Pakatan Rakyat in Selangor and Penang.They seemed more interested in witch hunting than getting down to serious work to administer the states.They delighted in digging into the sins of the previous administration rather than leaving it to discover in the course of doing their duty.
Facts and figures about crude oil:
1 barrel of crude = 42 U.S.gallon = 34.9 Imperial gallon = 158.9 litre
The table below shows what a typical barrel
of crude produces:
|Product||Percent of Total|
|Finished Motor Gasoline||51.4%|
|Distillate Fuel Oil||15.3%|
|Residual Fuel Oil||3.3%|
|Liquefied Refinery Gas||2.8%|
|Asphalt and Road Oil||1.7%|
|Other Refined Products||1.5%|
Bringing the price of petrol and diesel down would certainly endear the people to him but what price the nation would have to pay to make the people happy, Anwar popular and the nation broke.
Saturday, June 7, 2008
Are we to believe all those hardball politics ? Many don't and it makes life difficult for Prime Minister Abdullah Ahmad Badawi.
People like Anwar Ibrahim, estranged former Prime Minister Mahathir Mohammad and Pakatan Rakyat have vested interests to demonise Prime Minister Abdullah Ahmad Badawi.They should not be looked upon as guardian angels.They are the demolition squads.
Anwar wanted Pakatan Rakyat to take over the government and he takes the post of prime minister.Mahathir has an axe to grind with Abdullah for the shelving of his vision of grandeur.Mukhriz Mahathir has lost his sense of balance and had become a chip of the old bloke.
Put any of them to run the government under the present situation you would see the same scenario.Their incessant barkings are now becoming a source of annoyance and an insult to the intelligentsia.
It is amusing to note that an article on comments made by Mahathir in his blog on the recent price hike of petrol and diesel appeared in Malaysiakini penned by one Syed Jaymal Zahiid. Malaysiakini appended a table on the price of petrol in other oil producing countries without doing an analysis and rendering of the different economic and social structures of those countries in comparison with Malaysia. The table from the said article is reproduced below:
Looking at the prices in the table any laymen would
immediately conclude that the Malaysian
government was wrong and could well afford to
give the people cheaper price for petrol and diesel because we are oil producing nation.The purpose of the table is to mislead those who has no grasp of economics.
The writer and Malaysiakini should have shown some semblance of responsibility to explain the purpose of the table.
Malaysia is not in the same league as those OPEC countries mentioned in the table. Crude oil is not the staple food(product) of Malaysia. Our domestic consumption of oil is almost 78% of our production capacity.We are a minuscule net exporter of crude oil.
Let's take Venezuela, which has the same population as Malaysia.It produces 2.8 million barrels per day and exports 2.2 million bbl per day and consumes only 599,000, bbl per day. Its economy depended solely on export of crude oil.Almost 90% of its export earnings came from export of crude. It has the lowest price for fuel oil among OPEC members, an unimaginable amount of RM0.16 per litre.
President Hugo Chavez is doing what Mahathir has been doing for the 22 years he was in power.Instead of making strong effort to raise to optimum level the income and living standards of the people, he pampered them with all kind of subsidies just to keep himself in power. The Malaysians' mindsets are now finely-tuned to the subsidy mentality.
Let us now take the other end of the spectrum, UAE (United Arab Emirates) with a small population of 4.6 millions.It produces 2.54 bbl/day and exports almost all of its premium crude.It imports around 137,000 bbl/day for part of its domestic consumptions. Although it could offer its people the cheapest price for petrol or even give it away free, it didn't.Its domestic price for petrol is MR1.19 per litre which is about the same price during Mahathir's time.
UAE is a forward looking nation and has diversified its economy to be not solely dependent on its crude oil export.Unlike Chavez of Venezuela, the rulers of UAE are fully secured in their seats and have successfully modernised and elevated the income level and living standards of the people.
Prime Minister wannabe Anwar Ibrahim said the price hike “wanton in size and callous in effect” and described the steepness in the price increase as unconscionable.
Anwar together with his former boss played equally damaging role to propagate a carrot and stick administration during his time in UMNO.He did nothing to stop the abuses when he was in the comfort zone.If you opposed the government you are seen as a security threat and are likely to be charged under the ISA. If you are a strong party supporter or a clever sycophant you would be rewarded with lucrative government contracts or given well-established public listed company on the platter that can make you an instant millionaire.
More shameful is Mahathir veiled attempt to mislead the people by saying that the government has the money to keep the fuel subsidy. He is either bad in mathematics or intentionally misrepresented Petronas profits.
For an ex prime minister who had 22 years experience in running the nation he should know the nitty-gritty of economics and interpretation of financial statements.As an adviser to Petronas such blatant disregard for facts and figures is inexcusable.
Writing in his blog he said“Roughly Malaysia produces 650,000 barrels of crude per day. We consume 400,000 barrels leaving 250,000 barrels to be exported. Our 250,000 barrels of export should earn us RM27 billion.
“But Petronas made a profit of well over RM70 billion, all of which belong to the government. I feel sure that maintaining the subsidy and gradually decreasing it would not hurt government finances,”
"Three years ago the selling price of crude was about USD30 per barrel. Today it is USD130 – an increase of USD100. There is hardly any increase in the production cost so that the extra USD100 can be considered as pure profit.
Our 250,000 barrels of export should earn us 250,000 x 100 x 365 x 3 = RM27,375,000,000 (twenty seven billion Ringgit).
But Petronas made a profit of well over RM70 billion, all of which belong to the Government.
By all accounts the Government is flushed with money"
Mahathir's above calculation is grossly misleading and most unexpected coming from someone like him, who is adviser to Petronas and one who knew the inner workings of government.The RM27 billion he calculated is gross sale not profit.
Below are details of the world prices of crude and the spot price of Malaysian Tapis for the period shown there in.Prices are not average but year end price.The annual average price would be much lower.
Year World Price US$ Malaysian Tapis US$ (in red)
Dec 2003 28.13 32.03
Dec 2004 33.05 38.41
Dec 2005 51.73 61.97
Dec 2006 55.95 65.57
Dec 2007 89.76 98.44
Jan 2008 85.53 93.69
Feb 2008 95.15 104.21
Mar 2008 99.32 107.88
Apr 2008 111.03 120.88
May 2008 126.06 138.43
The price reached US130. bbl only in May 2008.
Assuming we take the year end price between 2003 and 2007, the price for the period would be an untrue average of US$59.28 per barrel for Malaysian Tapis Spot.Let us assume the true average was US$50.00.
Assuming Petronas produced a daily average production of 600,000 bbl/day for the period, the annual gross sale of crude would be US$50 x 365 x 600,000. = US$10.5 billion before deducting operational costs, royalty to states and taxes.
Let us work out how much Petronas make between the period Mahathir left office and Abdullah took over the helm to the end of 2007.
Annual sale of crude US$10.5
Less:5% royalty to states .525
Assuming all other costs were
50% of net sales 4.987
Net Profit to Petronas 4.987 x 3.20 = RM15.96
Petronas annual profit attributed to export of crude oil between 2003 to 2007 was only RM15.96 billion not RM27 billion as made out by Mahathir.Petronas also generates profits from it other operations especially its LNG and refined petroleum operations.Its other profit centres are from its overseas operations in other countries. In 2005 its revenue was US$44.3 billions and made a net profit of US$11.6 billions.
Petronas current crude production is in the region of 700,000 to 730,000 barrels per day.With the current high price of crude it probably can make RM60-70 billions from all its operations.
Malaysia's domestic consumption is in the region of 550,000 barrels a day and about 300,000 barrels of crude are imported to supplement the domestic needs .It is obvious from the amount of domestic consumption which is almost 78 % of the total crude production it would be unwise to fleece Petronas to continue with the subsidy. It would be likened to " kill the goose that lays the golden egg" if the government were irresponsible and continue the subsidy just to be popular with the people.
During Mahathir's time when the price of crude was much cheaper, averaging less than US$20. per barrel , Petronas profits had been even smaller. He kept Petronas accounts a closely guarded secret.
Why did Mahathir keeps the accounts of Petronas a secret? It is obvious he didn't want Malaysians to know how the money was spent and what are the reserves left after the many bail outs of failed projects and insolvent financial institutions and financing of his grandiose projects. Petronas is also wasting money on prestigious and non-revenue generating projects such as the Petronas Philharmonic Orchestra and bankrolling the F1 races. Now he claims the government is flushed with money.
The price of crude reached its peak at the end of May but have eased slightly since then.Will the price breached the US$200 mark this year?
Much depend on how the recession set in the United States and whether there would be decline in industrial outputs there, in China, India and other industrialised countries.A deep recession in the US could trigger off a chain reaction to other countries that have huge trades with it.A prolonged global recession would certainly bring down the price of crude and other commodities due to less demand.
With the recent price hike would Abdullah be in serious trouble of losing his job?
Much depend on the loyalty of the 150 BN members of parliament.If they stay with Abdullah his position would be unshakable. No reason for them no to, as by now, they would have realised the false claims by Anwar of the 30 MPs joining Pakatan Rakyat.Many dates given by Anwar and his cohort Jefferey Kitingan had passed without any sign of those frogs making an appearance.
Anwar appears unsure whether he should stand in a by-election against the might of the BN machinery and take the risk of being trashed.He kept saying he is not in a hurry.It's now obvious why he wanted to take over the government through the backdoor. To be on the safe side he would only stand in a by election after formation of the government under the Pakatan coalition.
The chance of a back door take-over seems to be fading away as time goes by.
If he stood in a by-election and lost that would be the end of him, his Pakatan Rakyat and his dream of becoming prime minister.
Abdullah needs massive image reconstruction if he wants to stay in power.His popularity rating has slid further down after the price hike.He is in dire need of a cabinet reshuffle and should get rid of those lazy ministers who have done him more harm than good.He should disband his 4th floor academicians.They are probably better suited to give lectures in our local universities than dishing out advices to the Prime Minister. Those kiddies from Oxford and Cambridge have not shown their mantle. If they had, the Prime Minister wouldn't be in such predicament.
The recent price increase has not been given serious thought and no campaign has been carried out to bring awareness to lessen the shock to the general public. The government should have used the mass media to advertise and dish the dirt out to the people on why the nation needs to reduce the subsidy, at least for six months before the date of implementation.It is obvious his cabinet ministers and public relation officers are not doing their jobs.
After asking the people to change their lifestyle and tighten their belts the government, likewise, must now go on an austerity drive starting with the Prime Minister leading the way by example.
Abdullah should cut down his overseas trip to the absolute minimum. Flying a big private jet is a very expensive affair, where possible he and his deputy should reduce the size of their entourage and used smaller jet or take commercial flights.
Ministers and civil servants should also curtail their overseas trips unless absolutely necessary. Many jaunts overseas had been known to be paid holidays under the guise of fact finding tours or working visits.
Ministers and senior civil servants should switch over to using smaller cars to conserve fuel and reduce government spending.
There are many more things that the government could do to send the message to the people that they are equally serious in cutting costs to reduce the burden on the people.
Abdullah taking this unpopular decision should be viewed positively.It means the man is not afraid of losing his job.
With the oppositions not showing any responsibility, inciting the people to take to the streets to demonstrate, will Abdullah reverses his decision again or send the water cannons and teargas ?
He has made his bed, he must now lie in it.
The simple-minded believe changing the government would change things for the better. Some will have the fortitude to accept the hard facts of life and bear the affliction with dignity while some will keep blaming the government for its uncaring attitude as theorised in Stanley Goh's "We need a more caring, innovative government" in Malaysiakini where he sees the government as the devil for all the hardship that some Malaysians may have to incur by the hike in prices of fuel oil.
Malaysians after many years of palliative care by the government now demand cheap fuel as of their rights and not as a privilege.
Than there are some publicity seeking activists who think going to the streets to vend their anger would scare the government and make them submit to their demands.
No government in their right mind would want to make unpopular decision unless they are forced by circumstances to do so.
Abdullah could have, to be popular, let the subsidy continue and hand over a bankrupt government to his successor or to the next government.