High Court rules Sabah, Sarawak can impose sales tax on petroleum products

April 30, 2020

Dateline 2020-03-13, FMT:

The High Court today ruled that Sabah and Sarawak have the right under the Federal Constitution to impose sales tax on petroleum products.

High Court Judge Azahari Kamal Ramli dismissed the leave application for judicial review by Petronas to declare the Sarawak state sales tax null and void.

Petronas had claimed that some parts of the state’s Sales Tax Ordinance 1998, which require the national oil company to pay the 5% sales tax on petroleum products to Sarawak, were unconstitutional.

The company’s lawyer Malik Imtiaz Sarwar argued that the notice of assessment issued by the Sarawak government to Petronas seeking payment of the tax on petroleum products was therefore invalid.

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Govt may consider floor price for petrol

April 29, 2020

Dateline 2020-03-13, Malaysian Reserve:

THE government may consider setting a floor price for petrol and diesel amid declining oil prices, said Domestic Trade and Consumer Affairs Minister Datuk Alexander Nanta Linggi (picture; centre).

“We will have to listen to all parties and brainstorm the idea. If it is good, we will bring this up to the Cabinet,” he told reporters after clocking in on the first day of work at his ministry in Putrajaya together with his deputy Datuk Rosol Wahid.

This came after Petrol Dealers Association of Malaysia (PDAM) suggested a floor price to be introduced for both petrol and diesel which in turn would protect dealers, consumers and the government.

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Low oil prices to remain, say experts

April 28, 2020

Dateline 2020-03-12, FMT:

 An analyst has warned that oil prices are expected to remain low in the wake of reports that oil markets have suffered their worst drop since the Gulf War.

However, Renato Lima De Olivera, a senior fellow at the Institute for Democracy and Economic Affairs, said this would also present a silver lining for several sectors.

He said the world would likely see low prices in the near future and that it might take some time for supply and demand to adjust again.

This is unless Russia and other Opec countries coordinate to reduce production, which would allow prices to recover.

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Oil price collapse could lead to cost pressures, defaults

April 27, 2020

Dateline 2020-03-11, Malaysian Reserve:

THE lower crude oil price is likely to hit contract rates and cashflows leading to potentially higher non-performing loans and impairments, particularly for oil and gas (O&G) companies with weak balance sheets and provide supplementary services to big oil producers.

As crude oil prices fall into the US$30 (RM126) a barrel levels, AxiCorp Financial Services Pte Ltd chief market strategist Stephen Innes said the lower price is bound to diminish revenue streams and likely take a toll on the financial capabilities of support service provider companies to service their loan debt.

He said Malaysian O&G companies are price takers, so a lot of industry constituents could struggle if prices remain low.

“I’m not suggesting any company in particular. The same thing is happening in Calgary, Alberta, when oil prices get depressed, the industry as a whole struggles,” he told The Malaysian Reserve (TMR).

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Direct hit seen for oil and gas companies

April 26, 2020

Dateline 2020-03-10, The Star:

The negative sentiment on oil prices, stemming from the Covid-19 outbreak and Opec+’s failure to cut oil production, is expected to cause a direct fundamental impact on domestic oil and gas companies, just as some of these companies are starting to see an improvement in their earnings.

UOB Kay Hian said that the combination of Covid-19 and Opec+’s failure may force Petronas to take action, potentially reducing activities if the national oil and gas company’s cash flow in the first half of the year is severely impacted.

“Covid-19 will be a triple whammy to Petronas in the form of oil prices (upstream income), petrochemical demand (downstream income) and disruptions or force majeures on long-term liquefied natural gas (LNG) exports (gas and new energy income), ” it said.

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Crude oil’s crash jeopardises Asia’s cleaner fuel ambitions

April 25, 2020

Dateline 2020-03-10, FMT:

Shockwaves from the oil price crash have hammered Asia’s biofuels industry, upending optimism over its future.

Crude’s nosedive erases any chance of discretionary blending of palm oil with diesel and drastically inflates the cost of government mandates.

“These are unprecedented times,” said Alvin Tai, an analyst at Bloomberg Intelligence.

Biofuels, such as a blend of diesel with palm, need to be attractively priced compared with fossil fuels to encourage consumption, and that often requires subsidies.

The almost 25% plunge in Brent crude oil on Monday, therefore, made palm oil’s competitive position dramatically worse.

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Direct hit seen for oil and gas companies

April 24, 2020

“May force”? Please…

Dateline 2020-03-10, The Star:

The negative sentiment on oil prices, stemming from the Covid-19 outbreak and Opec+’s failure to cut oil production, is expected to cause a direct fundamental impact on domestic oil and gas companies, just as some of these companies are starting to see an improvement in their earnings.

UOB Kay Hian said that the combination of Covid-19 and Opec+’s failure may force Petronas to take action, potentially reducing activities if the national oil and gas company’s cash flow in the first half of the year is severely impacted.

…

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Crude oil’s crash jeopardises Asia’s cleaner fuel ambitions

April 23, 2020

Dateline 2020-03-10, FMT:

Shockwaves from the oil price crash have hammered Asia’s biofuels industry, upending optimism over its future.

Crude’s nosedive erases any chance of discretionary blending of palm oil with diesel and drastically inflates the cost of government mandates.

“These are unprecedented times,” said Alvin Tai, an analyst at Bloomberg Intelligence.

Biofuels, such as a blend of diesel with palm, need to be attractively priced compared with fossil fuels to encourage consumption, and that often requires subsidies.

…

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Removing fuel subsidy will save RM6 bil, govt told as global oil price plunges

April 22, 2020

In an alternate timeline.

Dateline 2020-03-09, FMT:

Parti Sosialis Malaysia (PSM) today called on Putrajaya to do away with the fuel subsidy, saying this would save the government nearly RM6 billion in the wake of reports that oil markets have suffered their worst drop since the Gulf War.

The party’s environmental and climate crisis bureau committee member, Sharan Raj, said Perikatan Nasional should abolish the automatic pricing mechanism (APM) and allow for free float.

He said the money saved from removing the APM could be used to subsidise and expand public transport nationwide.

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Petronas fails again to recuse judge in sales tax dispute

April 21, 2020

Dateline 2020-03-06, FMT:

Petronas has failed again in its move to disqualify Judicial Commissioner (JC) Christopher Chin from hearing Sarawak’s suit for unpaid state sales tax amounting to RM1.3 billion.

A three-member Court of Appeal bench chaired by Badariah Sahamid said the prime minister had no influence in the elevation of JCs to become High Court judges under the Judicial Appointments Commission (JAC) Act.

Notwithstanding the provisions in the Federal Constitution, Badariah said, the prime minister was required under the law to uphold the independence of the judiciary.

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