PETROL SUBSIDY

Petrol Subsidy

The government’s subsidy on petrol has gone up despite the increase in the price of the fuel, 2nd Finance Minister Tan Sri Nor Mohamed Yakcop said. He said that although the petrol price had gone up by 5 sen per litre in the wake of rising crude oil prices, the government was forking out an additional 6 sen subsidy for every litre of the fuel sold.

He said the Current subsidy would be RM13.9bil from its previous RM11.6bil. In comparison, the subsidy was only RM6.8bil last year and RM4.3bil the year earlier.

In the article entitled "GDP growth best in almost four years" By Maisara Ismail and Annie Freeda Cruez, 26th. August 2004, NSTP, pertaining to the impact of high oil prices, Tan Sri Dr. Zeti, the Governor of Bank Negara foresaw no problems for the domestic economy and inflation stood at a low 1.2 per cent. "We are a net exporter of oil, and we don't expect higher oil prices to impact significantly on our economy. Zeti said. "As a rough estimate, a US$1 increase in global oil prices will positively impact the Government by RM100 million to RM200 million," she added. “We are a net exporter of oil and are well positioned to absorb the impact of any changes,” Dr. Zeti said.


Bank Negara strongly believes that high oil prices will not be detrimental to Malaysia as the Government stands to gain between RM100mil and RM200mil from every USD1 increase in the price of a barrel of crude oil after taking into account subsidies to keep petrol prices low,” said Bank Negara Governor Tan Sri Dr. Zeti.

Doing some mathematical calculations, using the figues given by Dr. Zeti, if we consider the price of crude oil to be USD20 a barrel in 2002, and USD53 a barrel now, that means there is an increase of USD33 a barrel which should translate to a positive gain of RM3.3billion to RM6.6billion nett gain for the government after taking into consideration of the total amount of subsidies by the government.

Then, how could it be that our 2nd Finance Minister says that the Government are in fact subsidising more????

Therefore, it clearly shows how the Minister is scewing the information by directing our focus to one point of calculation but not giving us the whole picture of the true financial figures.

Coupled with it will be the additional gains by Petronas whose pre-tax profit was RM37.4bil for the year 2003, which should balloon to something like RM70bil financial year 2004. Taking the fact that corporate tax of 28%, the government should receive around RM20bil taxation from Petronas alone.

Is that the way the government call - "Transparency and Accountability"??? by hookwinks and lies ........

It would had been better to say that the increase of fuel price and the reduction of subsidies is part of the government's effort to reduce the budget deficit and to provide more funds for development projects to pump prime the economy.

Maybe, if they are honest enough, it should be willing to admit that part of it will be used to award those who have help to ensure the victory of some leaders in the recent UMNO elections by giving them some projects.