Yesterday's sharp hike in petrol prices, the highest increase in more than a decade, has refocused public attention on the mega-profits made by state-owned oil company Petronas.

Malaysia, an oil producer, exports most of its petroleum - which is of high-grade quality and thus fetch a higher price in the international market - through Petronas. Meanwhile, the country imports low-grade petroleum for domestic consumption.

Crude oil prices have skyrocketed by as much as 30 percent in the past year, bringing windfall profits for Petronas.

However, this has also burned a hole in the government's coffers as domestic oil prices are kept artificially low to protect certain sectors in the local economy - among others, fishing and transportation - through government subsidies.

Petrol now cost an additional 10 sen a liter, or 7 percent, at the pumps, taking the price for premium to RM1.52, while diesel goes up by 20 sen a liter, or 23 percent, to RM1.081.

To justify the increase, the Prime Minister's Office said that the government had spend RM4.8 billion on oil subsidies last year.

If prices were not raised this year, the government would have to bear a subsidy of RM8.96 billion. With the new prices, the government would pay RM6.7 billion in subsidies, saving RM2.2 billion a year.

RM50 bil in 2005

However, an opposition leader argued that some of Petronas' profits could be used to relieve the burden of low-income Malaysians as a result of the hike in fuel prices.

Opposition Leader Lim Kit Siang said that this should have been done to cushion the expected inflationary pressures and the worsening of an economic slowdown.

Petronas registered a profit of RM26.3 billion last year.

"With Petronas profits for the 2005 financial year in the region of RM50 billion, or an additional windfall profit of some RM24 billion as compared to the previous year, it would be no strain for Petronas to absorb and relieve the RM2.2 billion burden of low-income Malaysians..." said Lim at a dinner in Perak's Gopeng last night.

He added that the amount represent only 10 percent of the additional Petronas profits when compared to the previous year, or less than five percent of its total profits for this year.

Lim said that it was only fair that Petronas fulfill its social responsibility by ensuring that "26 million Malaysians benefit from the country as an oil-producing and exporting nation."

The government has not reveal Petronas' accounts to the public since the company was set up 30 years ago.

It is estimated that Petronas has accumulated a profit of RM250 billion over the years. The company has been criticised for using its funds to finance a number of mega-projects when Dr Mahathir Mohamad was in power.

A month after Mahathir stepped down as prime minister, he was appointed Petronas advisor.