KUALA LUMPUR, Feb 23 — The listing of Petroliam Nasional Bhd (Petronas) is the prerogative of the government as its shareholder, but serious deliberation is needed as it involves national interests as well as the whole oil and gas ecosystem, said its president and group chief executive officer (CEO), Datuk Tengku Muhammad Taufik Aziz, today.

“If the prime minister asks me, I will give him the implications of both sides of the equation, whether it is catalytic oil and gas and equipment services (OGSE) industry, energy security...those are the dimensions that you really need to think very hard about.

“It is beyond dividends or fiscal as there are 150,000 people employed within this industry apart from our employees,” he said at an event with news editors called Dialogue with the President/Group CEO here today.

Tengku Muhammad Taufik said Petronas was established as a result of the Petroleum Development Act (PDA) in 1974, and there were duties and parts enshrined under the Act that involved the oil and gas firm extracting and maximising the value of hydrocarbon resources for the country.

“As both sides of the divide have commented, this may be a period where the timing seems advantageous for the listing due to the elevated prices. But let’s look at the questions and the suggestions raised by a certain member of Parliament around the listing being the impetus for more transparency and corporate governance.

“I want to answer this on the record because I have to correct the notion because when a parliamentarian said that, the inference is we do not pursue best practices or do not follow international disclosures,” he explained.

Tengku Muhammad Taufik stressed that Petronas’ accounts were in compliance with the IFRS standard and audited as well as accredited by the Big Four accounting firms.

“We report our results four times a year, and even those results were reviewed by a Big Four firm. We answer to Parliament. There are four questions lodged relating to Petronas that are never left unanswered. We have responded to ministries openly and transparently every time a matter of national importance comes to our desk,” he said.

Tengku Muhammad Taufik explained that Petronas is also scrutinised by local and international credit rating agencies and is notched against sovereign ratings.

Tengku Muhammad Taufik also brushed off the notion that profits would be elevated by listing to above RM60 billion and also shot down the allegations that Petronas hid about RM20-30 billion in profit.

“I do not know how this is concluded or where the numbers are drawn from, but again, we have to remind parliamentarians, analysts, and commentators that this is a highly cyclical market. People have short memories.

“I had the misfortune, but also the blessings, that when I took over the reins, we lodged our first-ever loss because of a large impairment due to the (Covid-19) pandemic, and we recognised it because it is required of us,” he said.

Petronas president and group CEO Tengku Muhammad Taufik Tengku Aziz speaks during a press conference after announcing the group's performance for the first half of year 2020 at the Kuala Lumpur Convention Centre in this file picture taken on September 4, 2020. —  Bernama pic
Petronas president and group CEO Tengku Muhammad Taufik Tengku Aziz speaks during a press conference after announcing the group's performance for the first half of year 2020 at the Kuala Lumpur Convention Centre in this file picture taken on September 4, 2020. — Bernama pic

Only temporary boost to government finances

Last week, Subang Member of Parliament Wong Chen called on the government to study the possibility of listing the national oil firm via an initial public offering (IPO) to raise money to help reduce the national debt.

Wong believed that proceeds raised from the Petronas IPO could pare down the government’s debts to about 30 per cent of gross domestic products in 10 to 15 years.

However, many questioned the proposed listing, citing IPO money to reduce debts as an unproductive way of doing things, among others.

Recently, economist Tan Sri Ramon Navaratnam warned that the proposed listing of Petronas on Bursa Malaysia would only give a temporary financial boost to the government.

According to a news report, Ramon was reported to have said that Petronas should be kept as a national entity because selling it would set a precedent for giving up top national enterprises.

Bank Islam Malaysia Bhd chief economist Firdaos Rosli said the idea of Petronas listing was not new and needed to be clearly thought out by various stakeholders.

“I am in two minds about this. While I support the idea of making Petronas a wholly commercial entity, the company has its fiduciary duty that aligns with the PDA 1974 act.

“We cannot have both in equal weightage, so we need to be clear about where this idea will bring us. I am unsure if the idea is sound because the rationale for paring down the national debt and the method to achieve that goal are unclear,” he told Bernama.

Concerning the paring down of the national debt, Firdaos said the government has to redeem its bonds earlier than their maturity date or restrain from debt rollover. The latter is a global norm but not the former.

“Either way, the government needs a steady stream of increasing revenues, not a one-off revenue-generating policy,” he said.

Firdaos added that considering that the purpose of listing Petronas has already been made public, potential investors may already form a perception that could put Petronas’ future share price at risk in the first place.

“As such, while policymakers focus on issues relating to the national debt level, revenues, and growth, we should not discount the impact of the listing exercise on Petronas’ future share price and its credit rating, which will, in turn, affect Malaysia’s sovereign rating as well,” he said.

Firdaos noted that Saudi Arabia was able to reduce its dependence on oil revenues because of the introduction of its value-added tax in 2018, the same year Malaysia repealed the Goods and Services Tax. — Bernama