A meticulous analysis before Sarawak buys Petronas shares

The study will also include the possibility of Sarawak buying certain Petronas subsidiaries as suggested by the PM

by AFIQ AZIZ/ graphic by MZUKRI

THE Sarawak state government will conduct a thorough analysis to study the viability and advantages of acquiring any stake in Petroliam Nasional Bhd (Petronas), before making any firm decision.

Sarawak Utilities Minister Datuk Seri Dr Stephen Rundi Utom told The Malaysian Reserve (TMR) that while the state government views the proposal made by Prime Minister (PM) Tun Dr Mahathir Mohamad positively, a meticulous approach will be conducted to ensure that a solid decision is made which will benefit the people.

“We will have to study first if it is an advantage for us or not,” he said, adding that the study would also include the possibility of Sarawak buying certain Petronas subsidiaries as suggested by the PM.

An international news agency reported on Tuesday that Dr Mahathir was mulling the disposal of some stakes in Petronas to states where the company’s oil and gas (O&G) are located.

The report said the move was motivated in a bid to raise funds for the debt-laden government. In the interview, Dr Mahathir said the initiative may also give states such as Sarawak and Sabah a say in the running of Petronas, the world’s third-largest exporter of liquefied natural gas.

He said the government would not dispose of Petronas shares in the open market, but only to states like Sabah and Sarawak.

“Petronas is a very big company; it depends on how much [the states] can pay also,” the PM said in the report.

“What we need is to reduce our involvement, the number of shares that we hold, in order to raise some funds for ourselves,” Dr Mahathir added.

The motion was also made in view of Putrajaya’s constraints in meeting the demand by the states for a quadrupling of the royalties paid by Petronas to 20% of its profit.

The increase in royalties could burn Petronas to up to US$7 billion (RM29 billion) a year.

Sarawak currently holds the largest discovered gas reserves in the country.

“I need some time to look at what it actually means by the relocation or selling of shares in Petronas.

“As the government, whatever proposal from the federal, we will study it. It has to be a collective decision by the state,” Stephen told TMR after closing the Sustainability and Renewable Energy Forum 2019 in Kuching, Sarawak, yesterday.

“I cannot make further comments now. The negotiations between the state and the federal government are still in progress. So, it will depend on the outcome of the negotiations,” he said.

Stephen added that a further discussion between the state and federal governments would take place before the end of the year.

Meanwhile, the Terengganu state government said it will consider buying a stake in Petronas if it is for a reasonable amount of equity.

Mentri Besar Datuk Seri Dr Ahmad Samsuri Mokhtar said in a Bernama report that the state government does not have the financial capacity to buy the entire shareholdings of the national oil company.

“It will depend on the relevant assets, ie oil wells, as to size and price, among others. If it amounts to billions (of ringgit), we (the state government) cannot afford it. (But) states like Sabah and Sarawak have large cash reserves compared to Terengganu.

“But if it’s in the form of equity, say 5% or 10%, then we can probably consider, (buying) a reasonable amount of equity. In Terengganu, we have many oil wells. If one oil well comes to only RM10 million or RM20 million, then we can buy,” he said when met by reporters after chairing a state executive council meeting at Wisma Darul Iman in Terengganu yesterday.

However, Ahmad Samsuri said the state government has not been officially informed about the proposal and will need detailed information before making any decision.

He said Terengganu continues to receive a 5% oil royalty from the federal government and has not made any demand to raise the royalty payment to 20% as has been done by Sabah and Sarawak.