Management of oil and gas 'poor and opaque'

Poor and opaque management of our oil and gas resources has put Malaysia down to 34th out of 58 countries in the Resource Governance Index (RGI), PAS Research Centre executive director Dr Dzulkefly Ahmad said today.

Citing the report released last month by Revenue Watch Institute, Dzulkefly said by comparison, Malaysia's neighbours are ranked far higher, with Timor Leste in 13th place, the Philippines ranked 23rd and Indonesia ranked 14th.

The same study in 2010 gave Malaysia a score of 48.4 percent, but this has dropped to 46 percent now.

Following this, Dzulkefly renewed calls for greater transparency in Petronas, the state-owned company that has a monopoly on all of the nation's oil and gas resources.

"The Petroleum Development Act 1974 needs to be amended so that the absolute power given to the prime minister to determine Petronas' direction and administration is transferred to the legislature.

"Let Parliament determine Petronas' operations collectively and by consensus," Dzulkefly (left) told a press conference today.

The former Kuala Selangor MP also called for a comprehensive audit of Petronas’ finances and the level of transparency in its governance, as well as a review on its bureaucracy and internal processes.

As it is, Dzulkefly said, Petronas spends between RM35 billion to 40 billion annually on its projects, but its details are unclear and neither the rakyat, nor their representatives are able to check on it.

In addition, he claimed that Petronas’ criteria for evaluating the award of contracts, licensing system and registration of vendors and contractors are unclear and opaque, as if they were being deliberately hidden.

“It clearly gives companies that have become BN cronies and Petronas’ senior management the opportunities to horde all these lucrative contracts.

“The licensing system has also failed to provide the sites and opportunities for new contractors and local start-ups to expand in the oil and gas industry, and has instead become an impediment,” he said.

As an example, he said, the early rounds of the open tender Risk Service Contract (RSC) for marginal oil fields did not have a clear criteria for awards, while forthcoming RSC rounds to develop the Bubu oil field, off the coast of Terengganu, are to be conducted via direct negotiations.

'The irony of looking down on Pertamina'

Such abuses, Dzulkefly noted, are similar to what Indonesian state oil company Pertamina had undergone under the then Indonesian President Suharto’s administration, which led to it being almost crippled.

“The irony is that we look down upon Pertamina to this day, but the reality is that our own oil company is now facing challenges that Pertamina faced 15 to 20 years ago.

“As a result of political interference at the highest levels and an absence of capable senior management, Petronas seems to have lost its direction and is heading towards a situation that Pertamina had gone through,” he stressed.

To a question, Dzulkefly said Pertamina has since been revitalised, as a result of Indonesia’s ongoing democratisation.

On another issue, he urged Prime Minister Najib Abdul Razak, Minister in Prime Minister’s Department Paul Low (right) and the Malaysian Anti-Corruption Commission (MACC) to disclose the investigations into accusations of corruption made against chief ministers and menteri besars.

These are the menteri besars of Johor, Negeri Sembilan and Terengganu, and the chief ministers of Sabah and Sarawak.

“If the investigation findings have absolved them of wrongdoings, the MACC should disclose this so that their good names can be defended and any allegations can be rebutted...

“Najib should do this to repair the perception and confidence of the people... if not, this perception will continue and worsen, because the people will not accept living under menteri besars like these (with graft allegations against them),” Dzulkefly added.