‘We deserve more than 5% oil royalty’

Datuk Seri Mohd Shafie Apdal. – Bernama

KOTA KINABALU: Sabah and Sarawak insist they deserve more than the existing 5% oil royalty – with Sabah wanting 20% and Sarawak going for an even bigger slice of the pie, saying they want to be included in Petronas’ production-sharing contracts (PSCs).

Sabah Chief Minister Datuk Seri Shafie Apdal said Parti Warisan Sabah is sticking to Pakatan Harapan’s promise of 20% oil royalty and believes it is doable.

A 20% royalty will mean the state would earn about RM6bil to RM7bil, necessary for its development that is lagging behind Peninsular Malaysia in many aspects, including basic infrastructure, healthcare and education, he said.

Speaking to reporters here, Shafie said he had spoken to Prime Minister Tun Dr Mahathir Mohamad about the oil royalty and was told the federal government needed some time to look into certain specifics because “it is not so easy”.

“I told him that if you do a CSR (corporate social responsibility) programme or give a post in the (Petronas) board to an individual, you make that person happy.

“But, if you give the 20% oil royalty, you will make three to four million Sabahans and Sarawakians happy,” he added.

Dr Mahathir had said the federal government is ready to revise the 5% royalty paid to oil-producing states, but the move must be done without “killing” Petronas.

Shafie, referring to the RM81bil East Coast Rail Line (ECRL) project under former prime minister Datuk Seri Najib Tun Razak, said: “What is RM6bil-7bil (oil royalty) when Najib can build RM55bil ECRL in Kuala Lumpur. We are building a nation here.”

Sabah and Sarawak have been receiving the 5% oil royalty since 1976 under the Petroleum Development Act 1974.

Describing Dr Mahathir’s announcement on Malaysia Day that the Pakatan government would restore the status of Sabah and Sarawak as equal partners in the federation, Shafie said it was unprecedented and historic for a prime minister to make such an announcement.

“This is something we have been looking forward to.

“Now, we have to go into the detailed part of it and look at the particular area for devolution of powers,” he said, adding that they would be guided by the states’ safeguards under the Malaysia Agreement 1963.

In Kuching, Deputy Chief Minister Tan Sri James Masing said Sarawak wants a say in Petronas’ PSCs.

“All oil and gas in Sarawak belong to the state. What we need to negotiate are the PSCs with Petronas. Petronas currently enjoys PSCs with other oil companies in the world.

“Sarawak wants a piece of the pie, with us in charge as the regulator (of the oil and gas industry), and we will invite Petronas and other oil majors to participate,” he added.

State Reform Party Sarawak (STAR) president Lina Soo said Petronas could not be “killed” by giving 20% royalties.

“Aceh and Kalimantan get much higher royalties than 5% and it hasn’t killed the Indonesian oil industry.

“And they are better developed compared to Sarawak and Sabah, which are the poorest and most backward states,” she claimed.

“Petronas can only be killed by inefficiency and corruption.”