Petronas: Insidious addiction to gas subsidies could cost RM28b

The bulk of the gas consumption goes towards electricity generation.

KUALA LUMPUR, Sept 7 Petronas pronounced currently which the country's dependence upon subsidised gas could price it scarcely RM30 billion this year or about twice the second entertain net profit.

The state oil company is struggling under the crushing gas funding weight as well as forgoing large income due federally mandated prices for gas which have been subsequent market levels.

Petronas arch executive Tan Sri Shamsul Azhar Abbas pronounced which the nation has an "insidious addiction" to subsidies and, for the initial half of this year, the price to subsidise gas amounted to RM14 billion.

"If we extrapolate that, it will be RM28 billion for 2012," he pronounced in the media briefing. "That is income foregone as well as income required to grow the business."

The volume for this year is expected to surpass the RM23.7 billion incurred final year as well as comes during the time when Petronas is facing doubt in the coming buliding due to flighty oil prices as well as production problems.

Petronas earned RM70.7 billion in income in the second quarter, down three per cent from the same period final year.

Net distinction fell thirty per cent to RM15.2 billion while the gross distinction domain shrank to 37.5 per cent from 42.4 per cent.

While the government has committed to reduce subsidies over the long term, gas prices have usually been adjusted once in the final two years.

The government's price controls as well as funding policies help Malaysia grasp the lower central inflation rate than the ASEAN neighbours.

Ratings agencies have warned which subsidies have been one of the factors causing weaknesses in the government's finances. But they additionally contend whic! h fundin g reforms have been doubtful until after the subsequent general election, due to the fright of the recoil during the polls if subsidies have been private as well as means the surge in the price of living.

Apart from gas, Malaysia, ranked as among the fattest of Asian countries, additionally subsidises sugar as well as flour.

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Courtesy of Bonology.com Politically Incorrect Buzz & Buzz