Petronas is an “elephant” in financial and performance terms

Petronas is an “elephant” in financial and performance terms 

Who is checking the Petronas accounts? (DE letter dated 10 March, 2019) deserves a response. Who can remain silent or indifferent for so long since 1974 with the Petroleum Development Act, 1974?

Actually, I did lodge two Police Reports on Petronas as far as they affect Sabah in all aspects of the oil exploration and the performance thereof.  The two Police Report are (1) Petronas Sabah  KK/rpt/27530/04 on 21 Dec 2004 on Petronas and its performance and impact on the welfare of Sabah. Why has this become an issue after 28 years since 1976? And (2) the Petroleum Development Act and Petronas, PM; National Petroleum Advisory Council L/002072/08 on 11/7/ 08. 

Performance of Petronas based on Sales revenue from 2004 to 2017 of a roller coaster trend from a high of RM329.1billion (2014) to low of RM97.5 b (2004) as listed as RM97.5b (2004) RM137.0b (2005)   RM167.4b (2006)   RM184.1b (2007)   RM223.1b (2008)  RM264.2b (2009)    RM210.8b (2010)  RM241.2b(2011)  RM291.0b (2012)    RM317.5b (2013)  RM329.1b (2014)     RM235.0b (2015) RM195.1b (2016)  RM223.6b (2017). (Source: Petronas website).  It has been rising from 2004 to 2009 and then down in 2010 and up and down until 2017. Who can give the explanation to such inconsistent performance?  Can such extreme volatility happen to any public or private companies and yet remain in business without any issues?  The value of the Ringgit in 2008 (RM223.1b) is not the same as in 2017 (RM223.6b) when purchasing power has greatly declined in 2017 hence any comparison in pure figure can be meaningless in term of performance. 

How accurate, transparent and accountable are the reports without subject to independent scrutiny especially it is now assumed that Petronas had a free hand to do as it liked prior to Company Act 2016 (CA 2016)?  

Since CA 2016, Petronas had posted a note in its website as “The Company and the following subsidiary companies, have been granted a relief order pursuant to Section 255(1) of the Companies Act, 2016 relieving the Directors of the companies form (from?) full compliance to the requirements under Section 253(2) of the Companies Act, 2016” (source: Annual Report 2017).

Also in the website, there is a standard notice restricting the public to use the data of Petronas with legal implication for such use.

So “Who is checking the Petronas accounts?” brings back some hollowness when Section 253 (2) of CA 2016 is an “approved” violation or departure from compliance in good governance. Petronas and its massive group of companies had been audited by a range of public auditors but not supervised by the Auditor General.

On 25^th March, 2019 Institute for Development Studies (IDS) together with G25 Malaysia and C4 held a Sabah Forum on Institutional Governance and Reform of GLCs where the Sabah CM Datuk Seri Shafie Afdal officiated and gave a key note address on such important matters faced by the State and the nation. 

We are aware that Petronas has a governance issue and much reform is needed but nothing is making any headway to deal with the “elephant” in the nation.

So I suggest strongly that a Royal Commission of Inquiry be instituted to look at the following agenda namely its performance for decades without public scrutiny, its affairs with the two major zones of oil in Sabah and Sarawak, the volatility of revenue especially in recent two decades, the noncompliance of PDA 1974 and now the CA 2016 as to the governance, its global connections, its outsourcing and Production Sharing Contracts, Joint Venture Agreements and other commercial undertaking as adverse impact on the gross revenue, various key indicators and debts servicing plus role in public affairs including fair distribution of the corporate social responsibilities.

Joshua Y C  Kong 28/03/2019