It is not unusual for a gov’t to rescue its major industries from collapse. In the case of Sapura Energy, any rescue effort will have a strategic purpose: The need to preserve an Oil and Gas player that is amongst the top players in the world.
Former Prime Minister Najib Razak in his recent articles made a plea that the Malaysian government should save Sapura Energy from being wound up.
Serious repercussions will take place should that happen to Sapura Energy. Thousands of employees will lose their jobs, banks will be exposed to billions of ringgit of bad loans, PNB as the major shareholder of 40% in Sapura Energy will be adversely affected as the shareholding will be worthless should the company fold.
Najib’s plea to save Sapura Energy received strong backlash from opposition leaders with a major attack from Rafizi Ramli of Parti Keadilan Rakyat (PKR).
What is the opinion of the public as innocent bystanders to this war of words between Najib and Rafizi?
For the answers to this question, we should look back at history — both locally and globally.
On the local front, the Malaysian government had in the past rescued PROTON from the verge of bankruptcy. Hundreds of millions were pumped into PROTON. And today, the national car manufacturer is flying high with its new partner GEELY from China.
Asian Financial Crisis
In the 80s, the country was badly hit by the ASIAN FINANCIAL CRISIS. The country’s major banks were stuck with non performing loans by the billions. The banks look like going under should there be no assistance from the gov’t. Assistance came in the form of DANAHARTA which took over the non-performing loans (NPLs) as a way to rescue the banks. The Government also took steps to merge the banking industry. As a result, many smaller banks were taken over by major banks such as Maybank, RHB Bank, CIMB Bank.
In terms of corporate cushioning, Malaysian Mining Corporation, Perwaja Steel and Malaysian Airline System are a few of the examples where the gov’t played the role of a White Knight.
On the global front, the US Government rescued FORD MOTORS from collapse. In the UK, the British Government rescued British Airways from their dire financial situation in the 80s and the 90s.
It is not unusual for a gov’t to rescue its major industries from collapse. In the case of Sapura Energy, any rescue effort will have a strategic purpose: The need to preserve an Oil and Gas player that is amongst the top players in the world. Without Sapura Energy, the country would not be able to tap the vast Oil and Gas business opportunities, killing the local vendors and support industries.
It is reported by the media that the local vendors are owed over RM4 billions by Sapura Energy. The collapse of Sapura Energy would deprive the vendors of the means to recover their payments.
PETRONAS As White Knight
PETRONAS as the national petroleum company should come to the rescue of Sapura Energy.That seems to be the opinion of netizens.Its the logical move for PETRONAS due to the synergy that exist with the business activities of Sapura Energy whose business structure still remain intact despite of the massive losses.All that is needed is an injection of capital by PETRONAS to enable business resume back to normal.
Alternatively, PETRONAS could takeover Sapura Energy through a shares acquisition exercise. A massive restructuring need to be conducted, some senior management staff need to be laid off and stalled contracts need to be revived, among others.
With PETRONAS as the controlling shareholder, it is expected that banks would be more willing to provide the required banking facilities for Sapura Energy to revive its business operations.
The question is, will PETRONAS rescue Sapura Energy? High probability it will. Presently, PETRONAS has taken position in Putrajaya Holdings Berhad, which is mainly in real estate development. Likewise, PETRONAS is in the hotel business with its stake in Impiana Hotel.
The PETRONAS Twin Towers is currently its major presence in the real estate sector. With such a diverse presence in the non Oil and Gas sector, there should be no reason why it should not rescue or takeover Sapura Energy which is a major player in the Oil and Gas industry.
Obviously, the Oppossition through its spokesman, Rafizi strongly objected to the proposal simply because it comes from Najib. The criticisms from Rafizi and other Opposition leaders should not be the yardstick whether or not to rescue Sapura Energy.
The reasonings from Najib should form the basis for the rescue of Sapura Energy. The Opposition PH has failed to move Malaysia economy forward during their 22 months in power. And the Sheraton Move government under Mahyuddin (Muhyiddin Yassin) has not improved the situation with bungling MCO policies over the Covid-19 pandemic.
Netizens hope that good common sense will prevail, and Sapura Energy be rescued, just as proposed by Najib. – New Malaysia Herald
About the writer: Kamarudin Ahmad is a social activist and a lawyer by profession and occasionally writes for the New Malaysia Herald (NMH). The points expressed in this article are that of the writer’s and do not necessarily reflect the stand of NMH