PETALING JAYA: A forensic audit should be carried out on Sapura Energy Bhd, if Datuk Seri Najib Razak’s suggestion that Petroliam Nasional Bhd (Petronas) come to the rescue of the loss-making company is considered, economists say .
The former prime minister said during his debate with opposition leader Anwar Ibrahim on Thursday (May 12th) that Petronas had the expertise to assist Sapura Energy.
Sunway University economics professor Dr Yeah Kim Leng said while Petronas was going to be seen as the white knight of Sapura Energy, the national oil company’s strategic fit, its ability to turn around the business and to absorb its debts without harming its own balance sheet will need to be checked.
“To ensure that the government, Petronas or whatever entity responsible for rescuing Sapura is not throwing away a lot of money, a full and objective assessment, including a forensic audit, must be conducted,” he said. told The Star.
The causes, consequences, costs and benefits of different options will need to be assessed thoroughly and objectively and, if public funds are used, in an open and transparent manner.
Options to reduce the social impact of the liquidation of the company, if they prove to be the optimal solution, will also have to be taken into account in the decision,” he added.
Geoffrey Williams, professor of economics at the University of Science and Technology Malaysia, said that as a general rule the government should not bail out failing companies.
“Sapura could be sold to overseas buyers if they saw commercial value in it. So government bailouts are not needed and are not the only solution,” he said.
As Datuk Seri Anwar Ibrahim suggested, no matter what, a forensic audit is necessary and any buyer would need it,” he added.
He said the idea of a government bailout is controversial as the company is struggling with high debt, as well as the reason for the failure.
He added that if Petronas is interested, it should conduct its own assessment of the option but the state oil company should not be forced into it.
Williams noted that Najib had suggested that due to Sapura’s size, number of employees, and number of contractors and suppliers, they would be harmed if the company went bankrupt.
“That may be true, but many employees would easily find new jobs, especially the more skilled ones, and suppliers may be compensated upon liquidation. Nevertheless, he is correct that the possibility of closure is detrimental to many people,” he added.
Najib also cited the US government’s bailout of American International Group and Citigroup as an example. He went on to add that the move has resulted in the government earning billions of dollars in profit in return.
“Petronas should take over Sapura. Petronas has the expertise that Permodalan Nasional Bhd does not. Petronas can guarantee that Sapura’s RM7bil contracts can be done well,” Najib said.
And Petronas can guarantee sufficient working capital for Sapura and when the company has recovered and the stock price has soared. Petronas can resell it. Petronas will make a profit,” he said.
He added Petronas, ASB investors and the country will benefit from this decision.
He also offered another option, which is for banks to provide financial assistance to Sapura while the government guarantees these loans.
Anwar, on the other hand, said Petronas belongs to the people, while strongly calling for a forensic audit of Sapura’s misfortunes before any bailout or assistance is rendered.
Sapura Energy recorded a net loss of RM8.9 billion for the year ended 31 January 2022, compared to RM160.87 million a year ago.
Revenue for the period under review fell 22.8% to RM4.13 billion from RM5.35 billion.
The oil and gas service provider is also indebted to the tune of RM10.3 billion.