Run With The Hare And Hunt With The Hounds

Hantu Laut

I am not really sure what to make out of Razaleigh's campaign on the oil royalty issue.It was a Kelantan problem.Why come to Sabah telling Sabahans giving them false hope that they could get more oil royalty if they negotiate with the Federal government which I presumed Razaleigh knew fully well to be a lost cause, at this moment, at least.

Despite his untiring effort to get it for Kelantan, the Federal government refused to entertain his argument that Kelantan is legally entitled to such payment.What's the point of telling Sabahans that they can get more when he can't even convince his party cadres in the ruling party to agree with his interpretation of the law.

I also have great difficulty to decide whether the Tengku is still in UMNO or working for the oppositions.He seems to be using the opposition's platform to voice his disagreement and has turned it into a nation wide campaign.

If I remember well it was him that got the Berjaya government to sign the 5% royalty after the toppling of Mustapha regime who, steadfastly, refused to accept the meagre payment by the Federal government.The oil royalty was one of the thorny issues during Mustapha's time and the cause of his downfall.

Maybe, it's about time Razaleigh decide whether he wants to stay in UMNO and sing the same song or leave the party and continue with his crusade.

He certainly can't run with the hare and hunt with the hounds.


'Nothing to stop review'

Published on: Sunday, April 04, 2010

Email to a friend

Penampang: There is nothing stopping the people of Sabah from calling upon the State Government to seek a re-negotiation with the Federal Government and Petronas on the quantum of oil royalty.

"If Sabahans want to hold a fresh negotiation through the State Government there is no one that can stop them because what we have is based on the original agreement," said former Finance Minister Tengku Razaleigh Hamzah.

"And if now they think they don't want the (current amount of 5pc) royalty then go ahead, ask the State Government to re-negotiate with Federal Government É I am not appointed as the State Government's advisor so its up to you," said Razaleigh, himself a former Petronas Chairman.

He said if the people and the State Government felt they have the capability to demand for a raise in the oil royalty then they should just go ahead.

Razaleigh, who was responsible for drawing up the Petroleum Development Act (PDA) 1974 that led to setting up the national petroleum company, Petronas, said this in response to questions after presenting a talk entitled "Sabah's Oil For Whom?" at the Hongkod Koisaan, KDCA, Friday night.

The event was organised by United Sabah Dusun Association (Usda) in collaboration with 14 other organisations. Some 1,000 people attended the talk that began at 8pm and lasted till nearly midnight.

On the question of how come Sabah and the other major oil producing states in the country continue to be lagging behind, the Gua Musang MP said poverty issues are not something that can be resolved immediately, even though the State has an abundance of oil resources.

He said the issues were inter-related with social, education and health, among others. However, it was also up to the people to ask the State Government on how the royalty was being spent (over the years), especially in the context of eradicating poverty.

"Ask the Government how the royalty had been spent.

As long as we continue to be mum we will not get the protection that we should get," he said.

To a question from Usda asking if there is a mechanism that can tell the volume of oil and gas taken out from Sabah, he said this was a matter of trust.

"If we want to measure it can be done. We can install meter gauge to measure how much oil and gas is taken out from Sabah. Now the question is whether this is necessary?" he said.

Such information, according to him, could be obtained from the Statistics Department and from the volume of Petronas exports.

On the issue of gas from Sabah to be channelled to Sarawak through pipelines, which should instead be used in Sabah by setting up a Liquefied Natural Gas (LNG) Processing Plant in the State, he said it should be the way.

"I am also curious why gas obtained from Sabah has to be channelled to Sarawak although Sabah really needs its own LNG plant," he said.

To the question from Ikatan Anak Anak Semenanjung on whether the Kelantan case where its royalty cash payment was being paid as an ex-gratia payment by the Federal Government could be challenged in court, he said in the affirmative.

"Anything can be challenged in the court to get justice but whether this will bring benefit or not is a different issue (as) the Federal Government have the power so they can do whatever they like it seems," he said.

Razaleigh said since he was the one together with late second Prime Minister Tun Abdul Razak responsible for drafting the PDA, he knew very well that there is no such provision in the Act on ex-gratia payment in place of the oil royalty.

"Our view and the Federal Government is different but I hope the Federal Government would be able to interpret the Act based on the real understanding," he said.

The PDA was drafted to utilise the oil from the waters of east coast in Semenanjung for developing the backward states there, he said.

Earlier, he said the total royalty paid to Sabah from 2004 to 2007 was RM1.23 billion, Sarawak (RM4.281 billion) and Terengganu (RM7.3 billion).Daily Express.

Razaleigh other story here.

Debunking The Wang Ehsan

Hantu Laut

'Royalty' or 'Goodwill'? The UMNO boys like to call it 'Wang Ehsan'.Tengku Razaleigh thinks otherwise even at the expense of being sacked from UMNO.One man who stood by his principle.

The BN government says Kelantan is not entitled to oil royalty payment.On the other hand, Tengku Razaleigh Hamzah, founding chairman of Petronas, whom I presumed knew better, insisted that Kelantan is entitled to such payment by virtue of the Petroleum Development Act.The relevant section which Razaleigh refering to is reproduced below.I presumed, the section become relevant in relation with the agreement signed by the state with Petronas.

4. Cash payment by the Corporation.

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.

Full text of the Act here.

One of the reasons given by the Federal government that disqualify Kelantan from receiving the oil royalty was that the oil fields were beyond the state's three-mile territorial waters.The oilfields in Sabah, Sarawak and Terengganu are well beyond the three-mile limit.

Are there no more honest people in government that can stand up and show sense of probity. Be honourable enough to admit that what Razaleigh claimed is true.

I am very familiar with most of the oil fields in the west coast of Sabah.From Semarang off Labuan to the North Furious rig west of Kudat.Being a blue water angler my fishing trips take me close to some of the rigs.The whole stretch of the west coast are dotted with rigs at various distances from the mainland, ranging from 25 to 50 nautical miles from the mainland.None are inside the 3-mile limit.Yet, Sabah along with Sarawak and Trengganu get paid 5% oil royalty.

What example are our leaders setting by this blatant disregard of probity and disrespect for written agreement which Razaleigh claimed was signed between the Kelantan state government and Petronas and by virtue of Article 4 of the Petroleum Development Act entitled Kelantan to the 5% royalty payment.

If the Federal government, the legislative makers of this nation can dishonour an agreement with its own state and at its whim and fancy what chance has ordinary citizen like us against the might of government and big corporations.

I wonder what kind of advises Prime Minister Najib Tun Razak gets that every time he announces a policy he loses more credibility and rebuff him from the people.The many unpleasant things that happened recently have ridiculed his 1 Malaysia effort.His government has become a government of "contradiction in terms"

Instead of spinning the untruths, it would be better for him to own up and admit that his government refused to pay Kelantan the oil royalty because it is govern by the opposition and giving them lots of money is like putting a noose around his government's neck.Former Prime Minister Mahatir Mohammad did that to Terengganu. Holding back payment when PAS ruled Terengganu and channelling it directly through Federal agencies.

If Kelantan is entitled to the money than the Federal government, if fearful of putting the money in PAS's hands, should directly pump it into developments in Kelantan instead of giving all kind of lame excuses which only make the people angrier and more determine to kick them out of office.

If Kelantan did sign an agreement with Petronas and by virtue of the Petroleum Development Act than that money is due to Kelantan as of rights, not Wang Ehsan.

The PM Must Cast His Net Wider

Hantu Laut

Although, I think the Prime Minister Najib Tun Razak has the prerogative to appoint whom he is comfortable with to the Petronas Board, his choice of candidate may not be suitable this time.

Omar Mustapha may be smart in his own right but for someone who had reneged on his contractual obligations with the company before it is quite right that Petronas Board resisted his appointment.The PM should have checked this fact before he even contemplates this move.It is also a good sign that independence and good governance prevail in the company and the PM should not push his agenda to upset the management of Petronas which until today were free of any scandal.Even Abdullah during his time did not upset the status quo in Petronas probably due to the presence of Tun Mahathir there.

The job is better off given to reputable retired top civil servant, technocrats and top-notch executive from the private sector.

Najib should cast his net wider to fish for the right person based more on qualifications,trust and confidence rather than personal relation.

Petronas: If It Ain't Broken, Don't Fix It

Hantu Laut

Rumours abound that there will be changes at the top management of Petronas.Tun Dr Mahathir, adviser to Petronas when asked said he has heard so but have no idea who the person is that supposedly will replace Hassan Merican as chairman of Petronas.

News from the grapevine says Syed Hamid Albar is one such possible candidate.Is there a need to make changes when the present man had proven his capabilities and Petronas is probably the best run GLC in the whole country, free of scandal, and for a company coming from a third world is highly respected internationally.

In 2007 Financial Times identified Petronas as one of the 'new seven sisters'.These are accreditation given to the most influential and mainly state-owned national oil and gas companies from countries outside the OECD.Petronas is also on the Fortune 500 list of companies.

There is nothing wrong with Petronas.Nothing is broken.Putting a full-time politician at the top would be inviting disaster.There would be many creepy crawlies waiting at his door to enchant him and tempt him.

Before you do anything silly just think of Pertamina.

How politicians and businessmen run the company into the ground with mounting debts they were unable to pay. At each stage of the transaction chain somebody was getting a cut.The Indonesian government have to bail out the company. The bail-out doubled Indonesia's foreign debt overnight.The culprit Ibnu Sutowo, probably the most corrupted man on the face of this earth at that time was never punished and his family is now one of the richest in Indonesia.

If it ain't broken, don't fix it.

Everything Alright Now ?

Hantu Laut

The Prime Minister managed to pacify Bernard Dompok by promising to set up a petrochemical industry in Sabah. Whether this promise will materialise is hard to say. Are there other considerations that we are not privy to? Pak Lah is leaving office soon and good luck to Dompok if he thinks that's going to happen.

Pak Lah has less than 5 months in office and the project has a gestation period of 5 years.Will Najib makes good Pak Lah's promise or would it end up the same as way as Pak Lah's promise to Mahathir to continue his legacy but didn't ?

You can read the story here

Bernard Giluk Dompok: 'A Dog In The Manger'

Hantu Laut

Never trust a politician to tell the truth.If they are in the government and make noises on certain issues most of the time it is for their own selfish interest not for the rakyat (the people).

Bernard Giluk Dompok, Minister in the Prime Minister's Department and President of UPKO has been yelling at the Sabah state government,Federal government and Petronas to scrap the gas pipeline from Kimanis in Sabah to Bintulu in Sarawak.

Petronas had explained that it is not economical to set up another LNG plant in Sabah due to reason of economy of scale where it is cheaper to pipe the gas to Bintulu.To set up a plant in Sabah would involve much bigger investment.

Bintulu is the single largest gas export terminal in the world where the gas are exported from one of the largest LNG plant in the world.It makes economic sense to pipe the gas to Bintulu.

The right thing for Bernard Giluk Dompok to do is to find out whether Sabah state is getting royalties from the sale of the gas and stop barking up the wrong tree to try rile up the people of Sabah to go against the Prime Minister and the Chief Minister of Sabah for something he was rumored to have tried to get for himself and his macais but was unsuccessful.The other story going round was that he was not happy with the PM for his appointment as Minister in the PM's Department which he thinks is below his level.It goes to show what kind of person he is.If you think the position is demeaning to you than why accept it in the first place.Anifah Aman and Ghaffur Salleh took the bold decisions not to accept.

This man had been critical of the PM since the days of Anwar's rhetoric of taking over the government and have shamelessly continue doing so ever since although he is a member of the Federal Cabinet.He is playing the same game as Yong Teck Lee.Keep one foot in the BN's ship and one foot hanging outside and in the event Anwar took over the government can jump ship and join Anwar.They think it's smart but they forgot there are people watching them and can read them through and through.It's disgustingly low level politicking.The right word would be 'politik kampong'.

Yong eventually took the right decision to take his party SAPP out of the BN and now have a rightful place in the opposition and have the right to criticise the government.

It is also not for Dompok to tell Petronas how to run its business.If Petronas is guided by politics more than by commercial consideration why did it put up the biggest LNG plant in Bintulu and not in Labuan or in Trengganu.They can run the pipe line to Labuan or Trengganu.They didn't because the cost would be exorbitant.

Bernard Giluk Dompok is playing a dangerous game of trying to rile up Sabahan to go against the Federal government because of his disillusionment with the PM and probably the Chief Minister of Sabah but still wants to wear the BN's hat.He also politicised the issue to gain political mileage in KDM(KadazanDusunMurut) areas and look forward to rejection of BN supports at the next elections.His party would than align with the oppositions.

Instead of his useless rhetoric on the gas pipeline he should have put all his effort to move the Federal government to take immediate action on the medical crisis in the state which is at a very critical level.

The Queen Elizabeth Hospital buildings have been found structurally unsafe and patients have been evacuated from the hospital and sent to smaller and poorly equipped hospitals in smaller towns causing great inconvenience to patients and their families.Which one he thinks is more urgent the gas pipeline or the medical crisis or is he a politician especially designated to look after the gas pipeline by his people?

This is typical of some of Sabah politicians, if you can't get what you wanted, point the gun, rile up the people and if the leadership give in and give you what you wanted than everything hunky dory.

If he is a gentleman and truly cares for Sabahan and is against the government policies than I would urge him in all sincerity to hand in his resignation as a Minister immediately.

If you don't than you are nothing but 'a dog in the manger'

Also read:
Dompok says not in the mood of giving up

The Petronas Mythbuster

Hantu Laut

Received in my email the letter below from a friend.

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.

Dear all,

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.


BOYCOTT PETRONAS?
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.

Thank you.

Tan, Boon Hua
Geoscientist
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 : tan_boonhua@petronas.com.my

Anwar Ibrahim Exposed

Hantu Laut

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:

Non-Malay seats
------------------
DAP 28
Sabah(non-UMNO) 11
Sarawak(non-PBB) 16
PKR(non-Malay) 11
MCA/MIC/Gerakan 20
--------------------------------
Total 86

Malay seats
------------------

PKR 20
PAS 23
----------------------------------
Total 43

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,
provide for—

(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
to petroleum;

(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.

Mahathir's Crude Calculation Of Crude Oil

Filling up, a painful
experience

Hantu Laut

Subsidising the costs of petrol and diesel are no more feasible due to the high costs of crude oil. Continuing doing so would eventually take the nation to the road of insolvency.The price hike announced by the Prime Minister recently would also put a brake on smuggling that have rendered the nation massive economic losses.

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
-----------
9.975

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.

Malaysian Philharmonic: An Oxymoron

Hantu Laut

I received the article or more appropriate I would say a letter in my email box two days ago. I believe there are undeniable truths to the writer's claims.

Being a fan of classical music myself I would certainly prefer local musicians in our philharmonic orchestra.Calling it a Malaysian Philharmonic and with 0ver 90 % foreign fiddlers is certainly an oxymoron.

It is absolutely ridiculous that after a decade we still couldn't find local musicians to take over from those costly foreigners.We all know we are not spared from all those ill-conceived and costly ideas by none others than our equally ridiculous leaders who seemed not to care how taxpayers' money are spent. Petronas money belong to the people of Malaysia and should be prudently managed and not spent at the whims and fancies of politicians.

There is no exiguous supply of local musicians if they really care to look around.The only problem is you may find them heavily concentrated in one racial group.They may not be top-notch but with proper training they would have acquired the skill by now if serious effort had been taken from the very beginning.

The other appalling thing is local musician of the same standing as their foreign counterpart would be paid a miserly amount, even the better ones would be paid less than the mediocre foreign musicians.

Maybe, we should send Mozart, Chopin, Bach and the rest of the gang back to the graves and go back to the kompang, anklong, gambus and kampong where we are better suited and stop pretending that we actually appreciate western classical music, a bought culture and social elitism at the expense of the Malaysian people.

Below is the letter:

Dear friends,

There can be no smoke without fire. Perhaps we should all stop going for these musical concerts just to teach these people a lesson.

Is this how we waste our money pretending to be social elite? In this case the kompang and anklong will sound better.Talk about corruption and mismanagement in Malaysia, we get it every which way we turn.

Much as we like to encourage appreciation of Western Music in Malaysia why is it that Petronas sees it fit to finance the 'Malaysian Philharmonic Orchestra' which is a misnomer because 95% of its 105 musicians are foreign and mainly European.

Each musician is paid between Rm 16,000- RM28,000 per month. They are given 2 months paid holiday and working conditions which are second to none in the world. They have not one but 3 European conductors.

The Chief Conductor is paid RM130,000 per month and the Associate Conductor gets paid RM50,000 per month.
The total Monthly budget for this orchestra is RM 3.5 million.

The Malaysian Conductor Ooi Chean See resigned because it was widely known she was being undermined and not allowed to develop in her career. During her time with the orchestra, her concert scehdule decreased gradually to the point she was doing only a couple 'Children's Concerts' per year.

The orchestra has been in existence for 10 years now and the total amount spent on this orchestra has been staggering RM 500 million.

Yes, Petronas does not have money for bridges for Malaysians but it has money to splash on foreign musicians. Petronas does not appear to have real desire to train or give opportunity to locals Musicians.

They promised to set up an Academy of Music to train local musicians with the tutors drawn from the orchestra but this sadly has not materialised.

Since its inception, the Malaysian Philharmonic orchestra has not increased its Malaysian participation which still stands at a shameful 4%. They have cosmetic programs like 'outreach' to supposedly encourage the love of western classical music to local Malaysians but these are essentially self serving publicity stunts.

Even the newly formed 'Malaysian Philharmonic Youth Orchestra' is a publicity stunt with no serious commitment to develop Malaysian talent. It is poorly organised and its musicians meet about twice a year only!

The previous founding CEO of the orchestra Mr Hamid Abu Bakar was clueless about music and left the artistic decisions to IMG, an international music agency who have successfully milked Petronas for tens of millions of dollars.

The current CEO Juniwati Hussin is a chemist by training and is a slight improvement because she does actually attend the concerts and is not averse to learning to appreciate western classical music. But the overall artisitc planning and direction in controlled by the Europeans who have a vested interest telling Petronas that there is no talent in Malaysia and the ignorant management of Petronas are happy to maintain the status quo. It would appear that they prefer foreign participation in this 'Malaysian Orchestra' rather than to have Malaysians. What a pathetic mindset.

I hope issues like this will be brought up in parliament. Why can't Petronas train local musicians, provide scholarships for locals to study abroad if need be, and then employ them in the orchestra. In a matter of a few years we can have an orchestra consisting of Malaysians true to the name Malaysian Philharmonic Orchestra and good enough to rival the Singapore Symphony Orchestra. There is an abundance of talent in Malaysia. The sad fact is, Malaysian talent is usually recognised overseas.

The Shenanigans of Gapari

Make a brave decision on polling day: Jeffrey

Keningau: Parti Keadilan Rakyat Vice-President Datuk Dr Jeffrey Kitingan (pic) urged the electorate in Sabah to make a brave decision by voting for all PKR candidates to "stop the rot in Sabah."

Jeffrey who is contesting the State seat of Bingkor and Parliamentary seat of Keningau told a gathering of more than 1,000 people that they must reject BN leaders for turning Sabah into the poorest State despite being rich in natural resources.

He said by allowing the prices of petrol and essential goods to go up, the government had caused suffering among the people.

"Sabahans must reject all BN candidates for creating a mess in Sabah, for making the natives even more poorer by driving them out of the land they have been occupying for generations and for allowing foreigners into the country without travel documents," he said.

In responding to Chief Minister Datuk Seri Musa Aman's comments that the PKR's promises in its manifesto are unrealistic and absurd, Jeffery said it is not difficult to reduce the prices of essential goods in Sabah.

He pointed out that the root of the problem is the withdrawal of the subsidy on petrol.

Jeffery said a PKR Federal Government will use part of the huge profit of Petronas estimated to be between RM65 billion and RM100 billion due to the current high price oil in the international market.

"Why can't the Government ask Petronas to use RM10 billion a year to subsidise petroleum to help all Malaysians reduce costs in doing their business and also to help the poor alleviate their daily financial hardship instead of keeping the money.

"In this way, the country will be more attractive to foreign investors, thus creating more job opportunities for Malaysians," he added.

Jeffery said the government effected the withdrawal of the subsidy on petrol throughout Malaysia with a promise to use the money saved to improve roads in the rural areas of Sabah and Sarawak but like other promises, this was not fulfilled.

Jeffery claimed the PKR was contesting 55 seats because it realised that the people genuinely wanted to change the State Government.

Daily Express