Page 9 - AsianOil Week 10 2023

AsianOil POLICY AsianOil

Malaysian MP moots Petronas IPO

MALAYSIA AN MP from Subang has recently proposed the number of recent scandals associated with Pet-
idea of a Petronas initial public offering (IPO), ronas. For example, Barakah Offshore launched
The lawmaker argued which could potentially raise a significant legal action against Petronas last year after being
that this could pay off amount of capital to pay down government debt suspended from bidding for new projects, and
government debt and and invest in business expansion. Specifically, the a Petronas executive was charged with allegedly
raise capital to expand MP, Wong Chen, suggested that the IPO could receiving MYR6.1mn ($1.37mn) in bribes.
the business. raise up to MYR300bn ($67.64bn), with a 20% To address these concerns, Wong Chen sug-
stake in the company sold to raise the funds. This gested that greater transparency of contracts
would leave Petronas with MYR60bn ($13.52bn) post-IPO could be demanded by minority share-
to invest in business expansion, particularly in holders, which would then spur improvements
alternative energy, with the aim of achieving a to overall corporate governance. This would be
reasonable 10% return on investment. an important step towards ensuring that the
While this proposal could provide a signif- company is accountable to its stakeholders and
icant boost to the government's finances and operates in an ethical and transparent manner.
help Petronas expand its operations, it would It is worth noting that the Malaysian govern-
require serious consideration. Petronas CEO, ment is currently facing a significant debt prob-
Tengku Muhammad Taufik, acknowledged that lem, with government debt set to increase to 62%
there are two sides to such a plan and that careful of GDP this year from 60.4% at the end of 2022.
consideration would need to be given before any As such, the idea of using a Petronas IPO to pay
decisions are made. The proposal raises impor- down government debt and invest in business
tant questions about the balance between gov- expansion is an attractive proposition, but it will
ernment debt reduction and the potential for require careful consideration and planning to
business expansion. ensure that it is carried out in a transparent, eth-
Moreover, Wong Chen also raised concerns ical and effective manner. Wong Chen has stated
over transparency and governance within the that he is willing to engage with Tengku Taufik
company. While he acknowledged that regular or any related party on the matter, which is an
audits by the big four accounting firms provide encouraging sign that there is a willingness to
some assurance, he noted that there have been a work towards a mutually beneficial solution. ™

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