Malaysia may reduce a government subsidy on natural gas sold to power producers and other industries due to rising gas prices, the prime minister said Monday, according to AP. The national oil and gas company Petronas, or Petroliam Nasional Bhd., has been pushing for a reduction in subsidies, saying it has provided nearly 50 billion ringgit (US$14 billion; ¤10 billion) in natural gas subsidies since 1997. State-owned power firm Tenaga and other independent power producers are the main buyers of natural gas from Petronas. Energy Minister Lim Keng Yaik recently ruled out a hike in electricity tariffs even if there is an increase in gas price. Prime Minister Abdullah Ahmad Badawi said the government will conduct a study on the situation, including the implications of a price hike on the public and various industries. «Our gas price is 70 percent lower than the market price,» Abdullah told reporters. «This is a very, very high subsidy. The question is, is this sustainable? ... Can we continue with this situation?» Abdullah said officials will need time to make a decision, but he indicated the government believes a price hike will not hurt industries. «We will make a decision as soon as we are satisfied and all calculations have been made,» Abdullah said. Petronas has reportedly said it is charging 6.40 ringgit (US$1.83; ¤1.30) per million British thermal units since 1997, even though the gas costs about 40 ringgit (US$11.40; ¤8.09) per million British thermal units. Energy Minister Lim Keng Yaik recently said Petronas had to import some gas at market rates from Indonesia and Thailand to meet domestic demand, but still sold the gas at subsidized rates.
