Skip to main content
Malaysia Grappling With Futher Price Increases
Gas Prices Potential Hike Subduing Markets

Malaysia will consider raising the price of subsidised natural gas to relieve some of the pressure on state-owned firm Petronas, the country's energy minister said. Energy Minister Lim Keng Yaik said that Petronas, which has asked for a hike, was under "tremendous stress" to meet domestic demand for gas at the subsidised rate, the state-run Bernama news agency reported on Sunday. Lim said Petronas was supplying gas at 6.40 ringgit (US$1.76) per million British thermal units (mbtu), well below the market price of 14 to 18 ringgit per mbtu. But Lim said the government will also take into account what impact a price hike would have on consumers. "Whatever increase in gas price, it has to be passed through. It would be passed to the consumer eventually and we are not willing to do that at the moment."

Last month, the government increased electricity rates for the first time in nearly a decade because of rising fuel costs. Petronas introduced a controversial natural gas price hike in December, but after public protests, the government asked Petronas to reverse the move. Petronas has supplied processed gas to Malaysia's debt-ridden utility giant Tenaga Nasional and independent power producers at the subsidised rate since 1997. Lim said the request from Petronas for a gas price hike would only be considered after talks between the government and power producers are completed. There is no set time-frame for the talks, he said.

The government is trying to re-negotiate power purchasing agreements between Tenaga and power producers to counter the increasing costs of oil and gas, according to reports. Reports say the government is expected to offer producers extended contracts to supply power if they charge Tenaga less.

Both issues are subduing the local equity market. The economy is vibrant and sturdy enough to withstand a hike in gas prices, but the political costs may be too damaging since the weekly protests at KLCC have not yet died down on the last fuel price hike. Considering the leak by Dr. M to the press (but was not even reported in even one local daily) Petronas recorded a record pretax profit of about RM80 billion (US$22 billion) for FYE March 2006. Last year's pretax profit figure was a paltry RM58 billion (and a net profit of RM35.6 billion). Certainly it will amount to political suicide to do a gas price hike now.

As for the renegotiations with IPPs, this uncertainty weighs on the related power stocks and Tenaga. The sooner they can clear it up, the better it will be. Any renegotiation should not result in grave detriment to either party, but will favour Tenaga.


Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.

My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.

I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.

My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.

Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:

p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far

I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…