Saturday, June 8, 2013

Media Statement: Ensure oil money put into good use

Petronas executive vice president of finance Datuk George Ratilal on 5 Jun 2013 has openly disagreed with the Minister in Prime Minister’s Department Datuk Paul Low, who had previously attributed Malaysia poor ranking Resource Governance Index (RGI) to Petronas’ overseas non- disclosure agreements (NDA). Ratilal insisted that Petronas has been transparent in overseas operations and their standard of disclosure is as good as other international oil companies such as Shell and Exxon-Mobil.

This open disagreement from Petronas is clearly a rebuke aimed at our newly minted Minister in Prime Minister’s Department. My earlier rebuttal statement had argued that the poor RGI ranking has little to do with disclosure of overseas operations but operation and business activities within Malaysia and now Petronas confirmed it that even there’s such indicator, Petronas has been living up to international standard.

We hope that by now Paul Low has already read the RGI report and realize that Malaysia poor ranking in RGI is due to the lack of comprehensive disclosure policies in Malaysia legal framework such as the freedom of information law and the lax of Petroleum Development Act 1974 in requiring Petronas to disclose certain information of their operations and business decisions within Malaysia such as the award of contracts, exploration license, subsidies, royalty transfers etc. Petronas is not required by the law to disclose this information and therefore should not be the scapegoat of the Barisan Nasional government for their inability in resource governance.

If the BN Government is really serious about transparency, we would like to challenge BN to push for Freedom of Information (FOI) Act, which allows the public to seek information made by government ministries and department as well as government-linked companies (GLCs) like Petronas. With that, the public can ask for information from Petronas such as the award of contracts and license grants, which in turn lessen leakages and corruption in the process.

Besides the introduction of FOI, the Petroleum Development Act 1974 should also be reviewed and amended to make it necessary by the law for Petronas to disclose sufficient information about its operation and business decision. Above all, Petronas should be accountable to the parliament and not to the prime minister only.

In fact Paul Low himself has praised the implementation of the FOI in the Pakatan Rakyat states of Selangor and Penang. He has called for its implementation by the Federal Government when the 2012 Transparency International Corruption Perception Index (TI-CPI) was released in December last year. Low had called for the overhaul the Official Secrets Act (OSA) and introduction of a federal Freedom of Information (FOI) Act and to further improve whistleblower legislation to provide wider protection to whistle blowers and encourage more whistle blowing. These were measures which he has put forward to improve Malaysia’s TI-CPI rankings.

On top of supporting the FOI, Datuk Paul Low must also persuade the cabinet to make Malaysia participate and compliant to the Extractive Industries Transparency Initiative (EITI), which is an international standard, endorsed by the World Bank, to increase transparency over payments by the oil companies to the governments and GLCs as well as transparency over the revenues collected by governments and their usage. There are already 14 countries that are EITI compliant including countries like Azerbajian, Ghana, Nigeria and Yemen and 22 countries in the EITI candidates list including Afghanistan, Kazakhstan and Sierra Leone. There is no justification for secrecy in Malaysia and therefore the government should take necessary steps to make us EITI compliant.

It is time for Malaysia to move to greater transparency and accountability in governing the wealth of
oil lest we fall into the category ‘curse of oil’ or ‘Dutch Disease’. Petronas is the 13th largest oil firm in the world by proven reserves and rank 12th under the most profitable companies category in the latest Fortune 500 list (FY2011 ended Jun 30). With better disclosure policies and Petronas made accountable to the parliament, we can make sure that the oil money are put in good use for the benefits of all rakyat as well as to invest for the future generation.

Datuk Paul Low has recognised the importance of the FOI Act and if he is successful in reforming the OSA while implementing the FOI Act, then he will certainly make his mark as the most succcessful Transparency Minister Malaysia has ever had.

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