Accountability issue of PETRONAS-Transparency 1. According to the article written by Datuk Dr Jeffrey Kitingan, a politician from Sabah who was a Vice President of Parti Keadilan Rakyat when he wrote this article. He said that Petronas agreements have been classified as secret. The clauses in the agreement are shielded from public scrutiny, this leads to transparency issue arise and making it an organization without public accountability. For example, 80% of the oil produced by Petronas is not sold directly to the world market but is channeled through six ‘option holders’ who obtain the supply from Petronas at below market prices.
Only 20% of the oil produced by Petronas is sold through direct open bidding. Because of this arrangement, Petronas is not maximizing its revenue by dealing direct with the open world market. Instead, it has been incurring incalculable losses for the nation and for the people. How much this huge loss is, we will never know. It is understood that this supply through the option holders is sold by contracts with a binding agreement for 20 or 30 years, causing huge losses for Petronas when oil price increases, as Petronas would then have to continue selling at the old agreed price.
Because of the agreement (contract) is not disclose to the public, thus, the public do not know who these option holders are and why they are in the first place. Besides, the public also wondering that are these people representing certain private interests? Because of the non transparent of Petronas agreements, many questions have been raised and the public think Petronas is a huge organization which is not accountable and secretive. 2. The annual report of Petronas is not in detail. For example, we can make a comparison between the 2011 annual report of Shell and 2011 annual report of Petronas.
As we can see from the picture below, the related party disclosure of Shell is more detail than Petronas. Shell discloses the company name that where the sale to and where the purchase from, however, Petronas just disclose the sale and purchases in general. This also means that Petronas annual report lack of transparency. In addition, Shell annual report also provides a detailed information of company properties, whereas, Petronas did not provide this information in annual report. | |