20% oil royalty unlikely to happen soon

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  • Thursday, 10 Oct 2019

Johari launching the state-owned Petroleum Sarawak Bhd in Kuching in March last year. — Filepic

THE promise by the Pakatan Harapan-led Federal Government to give 20% oil royalty to Sarawak looks to be as good as dead.

Prime Minister Tun Dr Mahathir Mohamad last week said it is “almost impossible” to fulfil the promise made in the run-up to the 14th general election.

He should just cut the rhetoric and say “absolutely impossible”.

The request from the Sarawak government to Petronas for oil royalty increase from the present 5% to 20% was made almost five years ago by the then Chief Minister Tan Sri Adenan Satem.

Following his death in 2017, his successor Datuk Patinggi Abang Johari Openg renewed his promise to secure the 20% royalty.

It now appears that this pledge will remain a dream.

Given the prevailing economic situation and looking at the oil price, I have to admit that getting the 20% oil royalty Sarawak is asking for looks unlikely anytime soon.

That is why Sarawak has established its own state-owned petroleum company called Petroleum Sarawak Bhd (Petros) to develop its oil resources.

By having its own petroleum company, Sarawak will get to chart its development agenda.

Sarawak is also looking beyond petroleum and timber which are its top revenue earners.

Johari had said that Petros has been tasked with developing new downstream sectors for the petroleum industry.

At the same time, he said Sarawak needed to jump on to the Industry 4.0 bandwagon to reap its benefits.

However, in his speeches, Johari also acknowledged that Sarawak still lacked even the most basic amenities like reliable water supply, electricity and roads.

Billions would be needed to upgrade these facilities, he noted.

That being the case, Johari and state leaders will do well to stop harping on the 20% oil royalty.

By all means, continue to negotiate for that.

But be realistic and focus on developing new financial revenue from manufacturing and agriculture instead of being stuck on one track.

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