Petronas ditches Lotus on a slippery surface

Kuala Lumpur, Dec 26 — The decision by state oil and gas company Petronas to sponsor the Mercedes Formula One team next season is a blow to the Malaysia-backed Lotus F1 racing team but may have political consequences for Petronas's independent chief executive.

Last month, Riad Asmat, the chief executive officer of Lotus F1 told the press that he had submitted a comprehensive sponsorship proposal to the oil firm but admitted that the well-heeled Petronas was being wooed by other international suitors.

It costs approximately RM1 billion a year to sponsor an F1 team.

Riad's statement led observers to conclude that Petronas would, indeed, be Lotus's main sponsor as the creation of the Malaysia-backed team had been announced by Prime Minister, Datuk Seri Najib Razak who'd said that it would be a government-backed venture. Lotus, which used to race on the circuit until 1994, is a subsidiary of Malaysian automotive firm Proton Holdings.

Industry executives familiar with the situation said that Lotus F1 boss Tony Fernandes, who controls budget carrier Air Asia, had also lobbied Petronas adviser Tun Dr Mahathir Mohamad, the former Prime Minister, to help persuade the oil firm.

While Petronas's decision may have been the right one commercially — Mercedes's superior brand name and its experience in F1 racing — it could have political consequences for Tan Sri Hassan Merican, the oil firm's chief executive whose contract expires in February.

Tan Sri Hassan does not have a great relationship with Datuk Seri Najib, his immediate boss, especially after the oil firm's board rejected the premier's request to appoint one of his candidates to the board.

A second request to appoint the same person led to the board deferring the decision until some of its members could meet the premier to brief him of the reason behind their actions.

The meeting went badly for them, according to the executives, and Omar Mustapha, Najib's candidate has since been duly appointed.

Even so, Hassan could yet be vindicated. Petronas's decision to go with Mercedes paid immediate dividends when Michael Schumacher, considered by many to be the finest racing driver of all time, joined the Mercedes GP Petronas team on Wednesday.

Malaysia's decision to join the F1 circuit makes it the only Asian country apart from India to take part. Inclusion, however, would make the country's Sepang racetrack, which hosts the third leg of the motorsport, a permanent fixture on the circuit. — Business Times Singapore