Kelantan suit against Petronas

  • Nation
  • Tuesday, 31 Aug 2010

KUALA LUMPUR: The Kelantan government has filed a breach of contract and constitutional suit against Petronas over the oil giant’s failure to pay the state oil royalty.

The state claims in the suit that Petronas had failed to make cash payments, which it claimed rightfully belonged to Kelantan for petroleum won and obtained offshore since 1998.

Kelantan Mentri Besar Datuk Nik Abdul Aziz Nik Mat and lawyer Tommy Thomas filed the civil suit at the High Court commercial registry at 9.25am yesterday.

Speaking to reporters later at the Federal Territory mosque, Nik Aziz said it was wajib or compulsory for him, as the head of the state government, to protect the state’s assets by whatever means, including consultation or legal action.

He added that he would pray to Allah and hoped the court would give a fair decision over the oil royalty dispute.

Nik Aziz and Kelantan executive councillor Datuk Husam Musa, who is the state’s Petroleum Royalty Claim Committee chairman, joined a group of about 100 supporters for a short prayer at the mosque after the suit was filed.

The supporters cheered as they held four banners in support of the filing. They were seen wearing vests with the words “Gerakan Bertindak Kembalikan Royalti Minyak” (Action Movement for the Return of Oil Royalties) on them.

Husam said the Kelantan government decided to sue Petronas, claiming that it didn’t receive a satisfactory response from the oil company over the cash payments.

According to the statement of claim, Petronas had wrongfully, in total failure of consideration and in breach of the Petroleum Develop­ment Act (PDA), the Kelantan Petroleum Agreement (KPA) and Kelantan Grant, failed and/or refused to make cash payments to the Kelantan government for petroleum won and obtained off Kelantan.

The claim stated that Petronas should make yearly cash payments equivalent to 5% of the value of the petroleum won and saved onshore and offshore Kelantan and sold by Petronas, its agents or contractors, to the Kelantan government.

The plaintiff claimed that despite failing to make the said cash payments, Petronas wrongfully continued to win and obtain petroleum offshore Kelantan.

Such conduct on the part of Petronas, it claimed, constituted unfair discrimination which resulted in severe financial loss to the state government and would continue to do so. It claimed that Kelantan had not been treated equally with Sabah, Sarawak and Terengganu.

The plaintiff is seeking an inquiry requiring Petronas to make full and truthful disclosure of all relevant facts relating to the cash payments payable to Kelantan.

The plaintiff is also asking for an order that all arrears of cash payments be paid to Kelantan within a month of the court order.

It wants all future cash payments to be paid to Kelantan for petroleum produced offshore Kelantan in accordance with the terms of the PDA and KPA. It is also claiming for damages, interests, costs and further relief deemed fit by the court.

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