KOTA KINABALU: Sabah is bracing for lower tax collection from the oil and gas sales tax this year due to global commodity and price conditions, says state Finance Minister Datuk Seri Masidi Manjun.
The Deputy Chief Minister II said there is a strong possibility that the state will not repeat last year’s collection of over RM2bil in sales tax from oil and gas revenue.
However, he said such situations are inevitable, as industry income fluctuates in line with global commodity prices.
"This year, it may be difficult to reach that amount due to lower oil output, so there is less oil to be taxed," he said.
Masidi was speaking to reporters after attending the Hibiscus Petroleum Raya networking luncheon here on Thursday (April 9).
He said that since the 5% sales tax on oil and gas was imposed in Sabah, it has contributed significantly to development and social aid for the people.
He said it is time to revisit the proposal to build a refinery in Sabah, specifically in the Kimanis oil and gas industrial area, especially as more oil fields are being discovered in the state.
"It doesn’t make sense that the oil comes from Sabah," said Masidi.
Regarding Hibiscus Petroleum, he said the company is performing well.
The company’s chairman, Zainul Rahim Mohd Zain, when asked, said it is possible for the company to work with the state government to set up a refinery in Sabah.
"But it depends on Sabah and PETRONAS as well," he said, adding that their current priority is to maintain existing production levels.
The company’s Country Head for Malaysia and Vietnam, Dr Pascal Hos, explained that an oil field naturally declines over time.
"So we spend a lot on operating costs just to make sure production remains steady. But we are always looking forward to other projects as well," he said.
