WHAT SUBSIDY???

From an anonymous email:

The story about “subsidy”…

A man called Maha owns a farm which can produce 10 apples every day. He has 5 workers to operate the farm. Each of them eats 1 apple daily and it is enough to keep them operating the farm normally. The remaining 4 apples, the landlord sells them at RM10 each and he earns RM40. He uses RM25 to improve the farm operation and facilities. He gives RM2.00 to each of his workers and he keeps the remaining RM5.00 as profit. Day by day, the farm is well developed and all of the 5 workers are happy with the money they can save.

When Maha passed away and there is a new landlord, Abdul comes to continue the farm operation. He says to the workers: "We need to improve the farm quality and redefine our way of thinking. From now on all of you only need to pay RM1.00 for each apple you eat. It is very cheap as the price is RM10 each outside the farm." The workers have no choice but to pay RM1.00 for the apple they eat daily. Their earnings decrease from RM2.00 to RM1.00 per person. As usual, Abdul sells the 4 apples and he gets RM40. He uses RM25 for farm improvement and pays RM10 to his 5 workers. He gets RM5.00 as profit. On top of that, he gets another RM5.00 from the apples that he sells to his workers. In total, he gets RM10 as profit every day.

Soon, the apple price increases to RM20 each. The new landlord gets a higher profit as he gets RM80 for the 4 apples he sells daily. Then, he decides to give the farming improvement contract to one of his close friends, Samy. Samy says: "Apple cost naik, improvement cost also misti naik." So, the farm improvement cost increases from RM25 to RM50. In actual fact, the improvement only cost RM30. The remaining RM20, Abdul and Samy share evenly among themselves.

Let’s calculate how much Abdul gets daily:

RM10 (from farm improvement cost)
RM20 (Net profit by selling 4 apples: [Gross profit, RM80] - [Improvement cost, RM50] - [Wages RM10] = RM20)
RM5 (from selling apples to his workers)

In total, Abdul gets RM35 daily compared to RM10 initially when he took over the farm from Maha. His profit increases RM25 and the workers are still getting RM1.00 daily per person. The greedy Abdul does not want to stop there. One day, he says to his fellow workers: "You see ah, the current market price for one apple is RM20 and you are only paying RM1. See how lucky you are! I have to SUBSIDISE RM19.00 for each of the apples you buy and total I need to SUBSIDISE RM95.00.

This will greatly burden the farm and we might get bankrupt if we continue like this. In order to avoid bankruptcy, I need to increase the apple price that you buy from RM1.00 to RM1.50 and I will bear the remaining RM18.50 per apple as my subsidy to you all." So, greedy Abdul adds RM2.50 to his current profit and the number becomes RM37.50.

After you have read the story, I am sure you have already understood the meaning of “SUBSIDY” given by the government.

The RM95 subsidy never existed in the first place and neither did the RM52 billion fuel subsidy generously “given” by the government.

Cutting fuel subsidy is actually just a reason to steal money from your pocket.

Are you gonna stand there and let them rob you？

Sarawak Headhunter's Comment: Their heads must roll!

BN Can Be Wiped Out In Sarawak

Sarawakians, please vote at Sarawak Headhunter on What's Next For Sarawakians:

At present 309 people have voted and the results are as follows:

PKR 129 (41%)
BN 15 (4%)
New Sarawak Party 56 (18%)
DAP 29 (9%)
Other State Opposition Party 5 (1%)
Independence 75 (24%)

Based on these preliminary results, it would appear that voters for New Sarawak Party and Independence are almost the same (42%) as for PKR (41%). If DAP at the State level does not go together with PKR but instead with NSP and Independence then they will have exactly 51% or 52% if Other State Opposition Parties are counted together.

PKR together with DAP gets 50% but does that get them enough seats, bearing in mind the heavy rural weightage in terms of number of seats but with much lower numbers of voters?

It would also appear that amongst the anti-BN forces, only 41% are attracted to PKR, while 18% would prefer a New Sarawak Party and 24% Independence.

But together the combined anti-BN forces can gather 96%.

The question is how to get them all to work together.

If all these elements can work together, it will be possible to completely wipe out BN in Sarawak.

Sarawakians, the future is in your own hands.

Make your vote "X" count!

CEO: Petronas will close down in 10 years if it hands over all profits

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From the Malaysian Insider

KUALA LUMPUR, June 6 — Tan Sri Hassan Marican shuns publicity. He hates press conferences and only meets the media when he wants to.

Yesterday, the president and chief executive officer of Petronas had little choice. With pressure on the ground against the Abdullah administration mounting over the 40 per cent fuel price hike and the possibility of street protests growing by the day, he was directed by top government officials to lift the veil of secrecy that shrouds the operations of Petronas.

He painted a dire scenario facing the national oil company, saying that it would cease to exist by 2018 if it was forced to hand over all the profits to the Government to continue subsidising fuel.

Speaking to editors and senior reporters at a special briefing on Petronas’ contribution to the country, Hassan said that at the close of its financial year in March last year, the national petroleum company had given the Government RM52.3 billion in taxes, royalties and dividends which worked out to be 32% of the Federal Government’s revenue.

“Since the formation of Petronas in 1974 to last year, the company gave the Government RM335.7 billion out of a total profit of RM570 billion,” he noted.

He argued that the oil company needed to reinvest its profits in new technologies and in search of new oil reserves. To date, Petronas has reinvested RM178.9 billion of its profits.

"There is one company, which I don't want to name, that gives back every dollar it made to the government concerned. Now it is suffering," he said.

"Any business if you don't reinvest, you cannot expand... so what do you do? The impact is on the shareholders, which in this case is the government. They will be getting less and less, and eventually zero," he added.

Hassan said continental shelf production and reserves have been coming down, being replaced by deep and ultra-deep water explorations.

"Going forward, it will be tougher. Resources will deplete for sure. Malaysia has been a producer of oil for more than 100 years," he said.

He also dismissed claims by critics of the government that because the price of crude oil was US$130 per barrel, Petronas was making more money than ever and well-placed to continue subsidising fuel prices in Malaysia.

“A lot of focus is placed on the high oil prices. There is very little talk about costs. The costs to explore and to drill for oil have increased by about 200% over the past three years.”

Hassan said Exxon Mobil made about US$40 billion (RM130.31 billion) last year, an increase of only US$1 billion from 2006, in an environment of higher crude oil prices.

“That is the world’s biggest, most efficient and most well-run oil company. Margins have eroded,” he said.

Hassan said Petronas was now “scraping the bottom of the barrel” as far as finding and extracting oil was concerned.

He challenged critics who said that Petronas was not transparent, saying that the corporation published a very detailed annual report which was deposited in the Parliament library.

“For all intents and purposes, Petronas is a public-listed company because we are rated by agencies like Standards and Poor, and Moody. We do not hide anything,” he added.

In the days ahead, the government may come under severe pressure to explain how it has spent the RM335 billion that it has received from Petronas since 1974. Such a disclosure is going to make many people in the government, past and present leaders, sweat.

Sarawak Headhunter's Comments:

In the first place nobody is asking PETRONAS to hand over all its profits to the Government to continue subsidising fuel. Is that what has been happening all these years? How does this "subsidy" work anyway? Why don't they explain the mechanism of this so-called "subsidy" or are they merely talking about opportunity cost here?

Please explain clearly to the rakyat so that they will understand.

At the same time, please explain to Sarawakians, Sabahans and Terengganuans why in spite of being oil-producing states they are burdened with higher prices as well. Does this not mean that they are "subsidising" all the other more developed states as well? Is this fair, especially when Sarawak, Sabah and Terengganu themselves still have high levels of poverty?

Please also explain why Terengganu has to literally beg for a share of its own oil revenues through the so-called "Wang Ehsan". Explain in detail how this "Wang Ehsan" was spent over the years and why RM4 billion of it (that we know of) is unaccounted for. Then we can talk about who's subsidising what and whom.

PETRONAS contributes 32% of the Federal Government’s revenue but has the Federal Government used this money for the full benefit of the rakyat?

Please explain why PETRONAS's contribution to the Federal Government is used to subsidise mismanagement, misgovernance, inefficiency, waste and corruption to the tune of RM335.7 billion between 1974 to last year.

We are not arguing about PETRONAS's need "to reinvest its profits in new technologies and in search of new oil reserves".

Hassan Merican is wrong. The impact is NOT on the shareholders, which he says are the government. The real impact is on the ordinary rakyat who are getting less and less, and eventually zero.

Who is Hassan trying to fool when he said continental shelf production and reserves have been coming down, being replaced by deep and ultra-deep water explorations and that resources will deplete for sure?

There is oil offshore of Kelantan for sure, otherwise there wouldn't be a joint concession area with the Thais at the international boundary which is producing oil, but why doesn't PETRONAS conduct any real exploration and production elsewhere there? The map from its website appears to show that there are exploration areas offshore Kelantan but are they really doing anything there? This map (shown above) actually dates back to August 2005 (Click on it for a larger version).

Why doesn't Kelantan get any royalties or even "Wang Ehsan" from the Malaysian-Thai Joint Development Area? The map also shows the presence of gasfields offshore Kelantan but in non-concession areas. Why haven't these been developed? Is PETRONAS practising directional drilling techniques to siphon off oil from Kelantan waters from oil rigs located in Trengganu waters to avoid paying Kelantan any royalty?

If the costs to explore and to drill for oil have really increased by about 200% over the past three years, ALL oil companies would be losing money unless oil prices have also increased by more than 200%, true or not? Does this idiot Hassan Merican think we are all fools?

Don't try to sidetrack us with the story that Exxon Mobil made about US$40 billion (RM130.31 billion) last year, an increase of only US$1 billion from 2006, in an environment of higher crude oil prices. That is a different story and probably has its own causes.

If PETRONAS was really now “scraping the bottom of the barrel” as far as finding and extracting oil was concerned, can Hassan please tell us how much of Malaysian territory, both onshore and offshore has really been explored, 5%, 50% or 90%?

How many people really have access to PETRONAS's annual reports which are deposited in the Parliament library? Sarawak Headhunter has recently found a link to PETRONAS's annual reports on its website, through the Investor Relations section: PETRONAS Annual Reports. As someone has pointed out, these are very basic and not detailed accounts.

Even if PETRONAS really does not hide anything, the truth of the matter is that it is not easy to get pertinent information from PETRONAS about anything, especially when its own CEO and other of its senior management mislead the press and the public.

We had not too long ago a Director and VP of PETRONAS telling us that PETRONAS "does not fund bridges". This is an outright lie. What about the bridges in Putrajaya, in fact what about the whole of Putrajaya itself? Are they telling us that PETRONAS's money did not fund the development of Putrajaya?

We really need better, clearer and more transparent explanations. It is not only PETRONAS which is answerable to the public but the whole government as well.

The rakyat deserves better explanations about how the nation's wealth is being spent. We would really like to know who is subsidising what and whom and how.

Or is the BN Government now really scraping the bottom of the barrel?

Petronas’ RM600 billion profit: Where has it all gone?

From Sarawak Talk

So the figure has been revealed. Petronas’ group profit before taxes, royalties, dividends and export duties amounted to RM570 billion for the period from its establishment in 1974 to 31 March 2007.

If you include the figure for the period until 31 March 2008, then you are probably looking at a figure closer to RM700 billion, with the higher oil prices.

Let’s see the breakdown of that RM570 billion:

Payments to the government (royalties, export duties, taxes and dividends) - RM359 billion

Allocations for shareholders, royalties and taxes abroad - RM41 billion

Profits re-invested in Petronas operations - RM170 billion

Total RM570 billion

(In case you are wondering where I got these figures from, they are from an oral response in Parliament to a question put forward to the Prime Minister by the MP for Bagan, Lim Guan Eng.)

So the government has received RM359 billion from Petronas over the years. If we include the year ended 31 March 2008, the figure would be in the RM400 billion range.

The big question is, has the government made the best use of all that money? You and I know the answer to that. If the money had been used effectively, we could have provided affordable housing for everyone in this land, invested in an excellent public transport system and come up with a first class public health care system providing universal access to all Malaysians.

But have we? Look how much has been wasted and squandered over the years. Think of all the natural gas subsidies dished out by Petronas to the Independent Power Producers (private electricity companies), which have been raking in billions in profits over the years. (And now they want to reduce the subsidies for ordinary Malaysians.) Think of the billions spent on bailing out banks. And remember the colossal sums spent on building Putrajaya, building the Twin Towers, hosting the Malaysian Grand Prix, sponsoring the Petronas racing teams and setting up the Malaysian Philharmonic Orchestra. All this while there are people without homes of their own, without a balanced and nutritious diet, without electricity and water in rural schools…

It is truly a lost opportunity, considering that we will soon become a net importer of oil in a few years’ time.

Meanwhile, ordinary Malaysians have no access to Petronas’ detailed accounts. Where is the accountability and transparency in the use of these massive amounts of public funds?

Sarawak Headhunter's comments: RM0-00 accountability, RM+++ billions public subsidies for wastage, mismanagement, misgovernance, inefficiency, corruption, siphoning off and squandering.

Malaysia is a net exporter of oil. What petrol subsidies are they talking about? How long more do they want to continue cheating the rakyat? How long more does Sarawak have to tolerate and subsidise Malayan (BN) & Taib & cronies' wastage, mismanagement, misgovernance, inefficiency, corruption, siphoning off and squandering?

Selamat Ari Gawai

Gayu Guru Gerai Nyamai

Happy Gawai to all those celebrating, with the hope that in the near future all Sarawakians will have something really worth celebrating.