Azmin: 20% of petroleum profits to producing states needs time to implement

KUALA LUMPUR: The Pakatan Harapan manifesto promise that all oil-producing states will receive 20% of net profits from the resource will take some time for the Government to study and implement.

Economic Affairs Minister Datuk Seri Mohamed Azmin Ali (pic) said this was because there were laws to be amended, mainly the Petroleum Development Act 1974.

“This is to allow for the royalty to be calculated based on net profits and not gross value, as is the case at the moment.

“If we were to double the existing royalty percentage without the amendments, it will have serious financial implications on Petronas and other oil and gas companies,” he said in reply to a question by Datuk Seri Madius Tangau (Upko - Tuaran) in Parliament on Wednesday (July 25).

Azmin said currently, the royalty was paid to oil-producing states at a 10% rate based on gross value.

Last Saturday (July 21), Prime Minister Tun Dr Mahathir Mohamad had announced that all states that produce oil will receive 20% of profits from the resource.

Azmin clarified that even in the Pakatan manifesto, it was made clear that the royalty will be based on net profit and not gross value, so as not to incur major losses for oil and gas companies.

Asked how the Government could have made the announcement without consulting the states first, Azmin said a special Cabinet committee has been formed, comprising experts from oil-producing states including Sabah and Sarawak.

“They will have six months to study and draw up recommendations agreeable to all parties involved, and then present these findings to the Cabinet.

“They will also be tasked with monitoring the implementation of this, to ensure it is done in a fair and transparent manner,” he said.