KUALA LUMPUR, Nov 30 – National oil company Petroliam Nasional Bhd (Petronas) will meet with the Economic Council in “the next two to three weeks” to review the gas subsidy borne by the group, which now reaches RM19 billion annually.

“Once and for all, we’re going to basically agree on how the new gas price is going to be established,” Petronas president and chief executive officer Datuk Shamsul Azhar Abbas told reporters today after announcing the group’s second quarter results.

“And that’s going to be critical, as far as Petronas is concerned, because we cannot afford subsidising to the tune of about RM19 billion every year in gas subsidy alone. That’s a huge amount,” he added.

Petronas, which also gives a RM30 billion as dividend payments to the government, subsidises gas for use by both power and non-power sectors.

Gas demand in Malaysia is primarily driven by the power sector, with 55 per cent of gas sales coming from the sector this quarter.

The non-power sector accounted for 38 per cent of total sales while the remaining 7 per cent was exported.

Last financial year, Petronas’ gas subsidy reached RM19 billion, or 9 per cent of total revenue. As of the first half this financial year, that amount stood at RM10.2 billion.

Cumulative subsidies borne by Petronas to date since gas price was fixed to the power sector in 1997 and the non-power sector in 2002 amount to RM126.6 billion.

“Hopefully, over the next few weeks, when we present our case to the Economic Council, they will agree with the proposal that’s been forwarded by Pemandu (Performance Management and Delivery Unit),” Shamsul added.

Under Pemandu’s gas subsidy rationalisation plan, the price of natural gas will be first raised by RM4.65 per mmbtu for the power sector and RM2.52 per mmbtu for the non-power sector.

The electricity tariff will be raised by 2.4 sen per kW/h and thereafter the price of natural gas will be increased by RM3 per mmbtu every six months.

With fuel costs being passed through to the customer, the price of electricity will also rise by 1.6 sen per kW/h every six months.