Brace yourselves - A sombre update (Part 1)
Moaz AhmadPublished: Nov 19, 2007 4:21 AM | Updated: Jan 29, 2008 10:21 AM
Not much more than two weeks ago, I wrote an article entitled 'Brace Yourselves' , which received many supportive comments.
Unfortunately, I think that the spirit of the article might have been misunderstood.
Although the article says a lot about inflation and the anticipated increase in prices, the focus was about the future of public transportation in Malaysia.
Not much more than two weeks ago, I wrote an article entitled 'Brace Yourselves', which received many supportive comments.
Unfortunately, I think that the spirit of the article might have been misunderstood.
Although the article says a lot about inflation and the anticipated increase in prices, the focus was about the future of public transportation in Malaysia.
While I held out a general warning to Malaysians that their lives were going to get tougher with higher prices, I was also providing specific warning to public transport users and the operators and regulators. This is, after all, a regular feature about transportation issues.
The fact is that there are serious problems ahead for the public transportation system in Kuala Lumpur as well as throughout Malaysia.
Like many other people, I remember the days when a barrel of oil was priced at US$30. Of course, I was a child at the time, so I probably didn't understand what those prices meant. I do remember the price of oil rising rapidly in the early 1990s in the lead-up to the Gulf War. This was followed by a collapse in oil prices that lasted about six years.Oil prices only started to increase noticeably around 2000. Since then, everything has gone crazy.
This year alone, the price of oil has shattered numerous records. Astonishing prices of US$70, 80, and 95 have been passed. There is talk about oil reaching US$100 per barrel, pushed there due to speculation and the declining value of the US dollar.
Many people believe that the price of oil is becoming inflated as a result of speculation and a bubble. There are predictions that, while oil prices will break through the US$100 barrier soon, this will be followed by a collapse in oil prices early next year. Of course, that 'collapse' will only put oil prices back to about US$70-80 or so, but after a taste of US$100, that will definitely be welcome.
After the bubble bursts, oil prices is expected to stay around the US$75 mark for some time. This will actually be a positive thing. High prices will encourage people to reduce their dependency on oil. Hybrid cars will find large markets. There will also be increased demand for alternatives to oil, such as bio-fuels, hydrogen power (which may or may not work), and solar and nuclear energy.
Wrong choices
The point is, we may finally be seeing the beginning of the end for the oil age. But not in Malaysia. The government is suffering right now because of oil subsidies. While Petronas is making a profit, billions of ringgit are being spent to keep pump prices fixed at RM1.92/litre for petrol. Actual prices are somewhere in the range of RM2.90/litre according to the government, but this is based on old data.
We do know that the government is spending at least RM1 or more to subsidise each litre of RON97, RON92, and diesel fuel. Total figures for the amount paid as subsidy are uncertain. The highest quoted figure was RM80 billion but figures of RM10-12 billion are probably more accurate.
That RM1 that you are not paying at the pump is being paid for by the government, using your tax money, or is coming from some of the billions of profits made by Petronas. They are using that money to keep the price of petrol low instead of spending it on developing Malaysia. And like most Malaysians, you could not have it any other way.
The problem lies in the fact that the government has yet to demonstrate a firm commitment to enhancing public transportation. Its plans suggest massive investment, with RM12 billion to be spent on public transportation in urban areas, while another RM12 billion is being spent on the rail double-tracking and electrification projects, which should have some benefits for passenger transportation.
Unfortunately, the government has made the wrong decisions when it comes to public transportation planning over the past five years. The focus has been on mega-projects such as LRT and monorail construction. Of course, mega-projects will require mega-ringgit. What this actually means is that less public transportation can be built for the same amount of money.
To put this into perspective, the cost of 1km of LRT construction is approximately RM200 million. The proposed 10km extension of the Kelana Jaya line would cost RM2 billion. From these numbers, RM12 billion will give us about 60km of LRT lines.
However, if the government had invested in developing Bus Rapid Transit, at a cost of about RM25 million per kilometre, that RM12 billion could construct 480km of public transportation routes.
That means that instead of building three lines for Kuala Lumpur and Penang, that RM12 billion could be used to build complete, comprehensive public transportation networks for the five largest cities.
Misallocation of money
Unfortunately, the government does not see public transport planning in this way. Budget 2008 made it clear that government only sees public transportation as the domain of the low-income group and as a way to reduce traffic congestion. The government has dedicated most of the funding for public transportation into mass-transit, not transit for the masses.
Specifically, mega-projects such as the extensions from Kelana Jaya to USJ, Seri Petaling to Puchong, and Sentual to Batu Caves, have been announced, along with the construction of the new Kota Damansara-Cheras LRT line and Penang Light Monorail.
Of course, these projects were announced a while ago. Nothing much has happened since, except for behind-the-scenes negotiation. The Selangor menteri besar has stated that he wants an extension of the Kelana Jaya LRT along with an LRT line circling the Klang Valley.
Subang Jaya state assembly representative Lee Hwa Beng has requested a line that services the major housing estates in Subang Jaya, Sunway, and USJ, and then publicly criticised the planners when it became clear that this was not possible.
Mega-projects require mega-money and mega-planning. Even if the projects were to start construction today, they would not be completed for at least three years.
In the meantime, the price of fuel continues to rise. Even if the price collapses and stays at a 'reasonable' level, the government would have spent billions of ringgit in development money that could have gone into making Malaysia a better place.
Note: Last week, in 'Planes, Trains, and Automobiles', I wrote that Firefly was operating aircraft capable of flying distances of 1,600km on a single load of fuel, which would put Bangkok and Jakarta within the budget carrier's reach.
I should have written that Firefly will soon have aircraft (ATR 70s) that are capable of these distances. Firefly's current fleet of Fokker aircraft cannot fly the distances described. I regret the error, and apologise to anyone who started considering a trip to Bangkok or Jakarta. You will have to wait a little longer.
Part 2 will appear tomorrow
MOAZ YUSUF AHMAD, a regular user of public transport, is deeply concerned that government plans to encourage the use of public transport will ultimately fail because of poor planning and lack of support from the public.
Unfortunately, I think that the spirit of the article might have been misunderstood.
Although the article says a lot about inflation and the anticipated increase in prices, the focus was about the future of public transportation in Malaysia.
While I held out a general warning to Malaysians that their lives were going to get tougher with higher prices, I was also providing specific warning to public transport users and the operators and regulators. This is, after all, a regular feature about transportation issues.
The fact is that there are serious problems ahead for the public transportation system in Kuala Lumpur as well as throughout Malaysia.
Like many other people, I remember the days when a barrel of oil was priced at US$30. Of course, I was a child at the time, so I probably didn't understand what those prices meant. I do remember the price of oil rising rapidly in the early 1990s in the lead-up to the Gulf War. This was followed by a collapse in oil prices that lasted about six years.Oil prices only started to increase noticeably around 2000. Since then, everything has gone crazy.
This year alone, the price of oil has shattered numerous records. Astonishing prices of US$70, 80, and 95 have been passed. There is talk about oil reaching US$100 per barrel, pushed there due to speculation and the declining value of the US dollar. Many people believe that the price of oil is becoming inflated as a result of speculation and a bubble. There are predictions that, while oil prices will break through the US$100 barrier soon, this will be followed by a collapse in oil prices early next year. Of course, that 'collapse' will only put oil prices back to about US$70-80 or so, but after a taste of US$100, that will definitely be welcome.
After the bubble bursts, oil prices is expected to stay around the US$75 mark for some time. This will actually be a positive thing. High prices will encourage people to reduce their dependency on oil. Hybrid cars will find large markets. There will also be increased demand for alternatives to oil, such as bio-fuels, hydrogen power (which may or may not work), and solar and nuclear energy.
Wrong choices
The point is, we may finally be seeing the beginning of the end for the oil age. But not in Malaysia. The government is suffering right now because of oil subsidies. While Petronas is making a profit, billions of ringgit are being spent to keep pump prices fixed at RM1.92/litre for petrol. Actual prices are somewhere in the range of RM2.90/litre according to the government, but this is based on old data.
We do know that the government is spending at least RM1 or more to subsidise each litre of RON97, RON92, and diesel fuel. Total figures for the amount paid as subsidy are uncertain. The highest quoted figure was RM80 billion but figures of RM10-12 billion are probably more accurate. That RM1 that you are not paying at the pump is being paid for by the government, using your tax money, or is coming from some of the billions of profits made by Petronas. They are using that money to keep the price of petrol low instead of spending it on developing Malaysia. And like most Malaysians, you could not have it any other way.
The problem lies in the fact that the government has yet to demonstrate a firm commitment to enhancing public transportation. Its plans suggest massive investment, with RM12 billion to be spent on public transportation in urban areas, while another RM12 billion is being spent on the rail double-tracking and electrification projects, which should have some benefits for passenger transportation.
Unfortunately, the government has made the wrong decisions when it comes to public transportation planning over the past five years. The focus has been on mega-projects such as LRT and monorail construction. Of course, mega-projects will require mega-ringgit. What this actually means is that less public transportation can be built for the same amount of money.
To put this into perspective, the cost of 1km of LRT construction is approximately RM200 million. The proposed 10km extension of the Kelana Jaya line would cost RM2 billion. From these numbers, RM12 billion will give us about 60km of LRT lines. However, if the government had invested in developing Bus Rapid Transit, at a cost of about RM25 million per kilometre, that RM12 billion could construct 480km of public transportation routes.
That means that instead of building three lines for Kuala Lumpur and Penang, that RM12 billion could be used to build complete, comprehensive public transportation networks for the five largest cities.
Misallocation of money
Unfortunately, the government does not see public transport planning in this way. Budget 2008 made it clear that government only sees public transportation as the domain of the low-income group and as a way to reduce traffic congestion. The government has dedicated most of the funding for public transportation into mass-transit, not transit for the masses.
Specifically, mega-projects such as the extensions from Kelana Jaya to USJ, Seri Petaling to Puchong, and Sentual to Batu Caves, have been announced, along with the construction of the new Kota Damansara-Cheras LRT line and Penang Light Monorail.
Of course, these projects were announced a while ago. Nothing much has happened since, except for behind-the-scenes negotiation. The Selangor menteri besar has stated that he wants an extension of the Kelana Jaya LRT along with an LRT line circling the Klang Valley.
Subang Jaya state assembly representative Lee Hwa Beng has requested a line that services the major housing estates in Subang Jaya, Sunway, and USJ, and then publicly criticised the planners when it became clear that this was not possible. Mega-projects require mega-money and mega-planning. Even if the projects were to start construction today, they would not be completed for at least three years.
In the meantime, the price of fuel continues to rise. Even if the price collapses and stays at a 'reasonable' level, the government would have spent billions of ringgit in development money that could have gone into making Malaysia a better place.
Note: Last week, in 'Planes, Trains, and Automobiles', I wrote that Firefly was operating aircraft capable of flying distances of 1,600km on a single load of fuel, which would put Bangkok and Jakarta within the budget carrier's reach.
I should have written that Firefly will soon have aircraft (ATR 70s) that are capable of these distances. Firefly's current fleet of Fokker aircraft cannot fly the distances described. I regret the error, and apologise to anyone who started considering a trip to Bangkok or Jakarta. You will have to wait a little longer.
Part 2 will appear tomorrow
MOAZ YUSUF AHMAD, a regular user of public transport, is deeply concerned that government plans to encourage the use of public transport will ultimately fail because of poor planning and lack of support from the public.
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