Malaysia PM: Petronas could be sold to pay down debt

STAKES in state-energy firm Petronas could be sold to Malaysia’s oil-producing states to raise money for the Government, Prime Minister Mahathir bin Mohamad has told Reuters.

“What we need is to reduce our involvement, the number of shares that we hold, in order to raise some funds for ourselves,” he said. National debt is more RM1trn (US$240bn) according to figures released by the country’s finance ministry in September; while Petronas is estimated to have contributed around 20% of Government revenue in 2019.

“[Petronas is] fully owned by the Government, it’s up to the Government to sell the shares privately not in the market, to states like Sabah and Sarawak,” Mahathir told Reuters.

The states of Sabah and Sarawak hold 37% and 27% of Petronas’ crude oil reserves, according to figures published by Malaysia’s energy commission in 2018. The states have been pushing the Government to increase the royalties they receive from oil production to 20% from 5%.

Speaking to state news agency Bernama, Sarawak’s State Chief Minister Datuk Patinggi Abang Johari Tun Openg said he needs more details on the Prime Minister’s offer.

The state of Terengganu, which also produces oil, appears more forthcoming. The head of the Government told Bernama while the state does not have the large cash reserves of Sabah and Sarawak, it would discuss buying a portion of Petronas.

“It will depend on the relevant assets, ie oil wells, as to size and price, among others. If it amounts to billions [of ringgits], we cannot afford it,” Datuk Seri Ahmad Samsuri Mokhtar said.

“But if it’s in the form of equity, say 5 or 10%, then we can probably consider, [buying] a reasonable amount of equity,” he added.