POWER OIL AND GAS

INCREASE IN ELECTRIC AND GAS TARIFF

Tan Sri Mohd Hassan Marican's contract as chief executive expires this month and the industry is talking about three possible candidates who may well take over.


EXPECT at least two major announcements in the energy sector this month: the first being who will step into Tan Sri Mohd Hassan Marican's shoes at Petroliam Nasional Bhd (Petronas) and the second, a possible increase in how much we pay for gas and, consequently, electricity.
Hassan requires little introduction. In a nutshell, he is Petronas' face - from the national oil company's hundreds of petrol stations in the country right up to the hostile environment in drilling rigs in North Africa and, soon, war-torn Iraq.

Hassan also serves as an important testimonial of sorts of Petronas' financial background every time it goes to the international market for funding.

His contract as chief executive (CEO) expires this month and the industry is talking about three possible candidates who may well take over.
They are Datuk Shamsul Azhar Abbas, former MISC Bhd managing director; Datuk Anuar Ahmad, currently Petronas Dagangan Bhd chairman; and Datuk Wan Zulkifli Wan Ariffin, former managing director and CEO of Petronas Gas Bhd.

Both Anuar, vice-president of human resources management, and Wan Zulkifli, vice-president of gas business, are Petronas board members.

If the requirement is someone from within, as suggested by Petronas adviser and former prime pinister Tun Dr Mahathir Mohamad, the three candidates fit the bill.

And, although the industry is saying that it would be no mean feat to fill Hassan's shoes, whoever is chosen would have little choice but to rise to the occasion. Petronas is a vital organisation for Malaysia, period.

The candidates to replace Hassan aside, for Malaysians in general a crucial anouncement is also forthcoming as to whether we will have to fork out more to get by.

A gas tariff revision is expected to be deliberated in this month. The gas tariff has a direct bearing on how much we pay for electricity and, consequently, on everything else.

The government decided that, beginning July 2008, gas tariff would be revised annually. However, there has not been any revision since then. There is every likelihood that it would be revised, upwards possibly, anytime now.

The increase in gas tariff is unavoidable because of the sudden high demand for gas, which led to Petronas having to import the commodity at market price but selling locally at a discount of 50 per cent.

At present, gas is sold at RM10.70 per million British Thermal Unit (mmbtu) to the power sector; RM15.35/mmbtu, non-power; and RM15/mmbtu, Gas Malaysia. The market price is almost RM40/mmbtu.

The subsidy Petronas is providing gas users is becoming a burden to the company and has created a major distortion in the supply-and-demand balance.

In its financial year ended March 31 2009, Petronas' total gas subsidy to the power and non-power sectors was RM19.5 billion, money which could have been put to better use.

For consumers, their main worry would be the consequent increase in power tariff.

The government, meanwhile, is well aware that, anywhere in the world, the issue of electricity tariff is like a hornet's nest and asking consumers to reduce electricity usage has been proven as being, well, easier said than done. 





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