PUTRAJAYA MUST HAVE DIALOGUE WITH SARAWAK
The Federal Govt and Petronas should allow Sarawak to play a more active role in the oil and gas industry
PETROLIAM Nasional Berhad (Petronas) is seeking legal clarity over its very existence as the sole custodian and regulator of the nation’s entire oil and gas industry. This follows earlier efforts by the Sarawak government led by Chief Minister Datuk Patinggi Abang Johari Openg openly seeking to challenge Petronas’ central role in the industry.
In his pursuit of fully legitimate efforts to carve out a bigger role for Sarawak over its own oil and gas resources, Abang Johari had unfortunately taken the position that Petronas is a hindrance to those efforts. Accordingly, he has sought to undercut Petronas’ very raison d’etre by questioning the efficacy of the Petroleum Development Act, 1974 (PDA 1974) which brought our national oil giant into existence.
Besides, time is ticking away. Sarawak, which has set up Petroleum Sarawak Berhad (Petros) as almost the exact state copy of Petronas, has let it be known that the new state entity will assume full control of the industry in Sarawak on the state government’s behalf by as early as next month.
Legal observers had already assumed before that the state’s moves will inevitably land it in the courts. PDA 1974 is the law of the land duly enacted by Parliament. Not even the prime minister, let alone the Sarawak chief minister, can simply set it aside unilaterally, even by countervailing state legislation as the Sarawak government intends.
So, Sarawak’s initiatives set it on the path towards seeming confrontation that is unavoidable given the tremendous implications and stakes they potentially involve for the industry. But, even at this late hour, when the legal train has already been set in motion, good sense all round must prevail not only for the well-being of the industry but because of the industry’s huge economic impact for the entire nation as well.
The chain of events leading to this juncture points to the fact that this is not something out of the blue that occurred in isolation. Many attribute its genesis to the move by the late Sarawak chief minister Tan Sri Adenan Satem to demand, by way of an unanimous State Assembly motion, an increase in the quantum of royalty paid by Petronas to the state from five to 20 per cent.
Petronas ought to have taken up that move as at least the basis for negotiation since the five per cent royalty payment has increasingly become a popular point of contention, even ridicule. The lack of any reaction on the part of Petronas to the state legislative motion may now be taken, on hindsight, as a mistake which, moreover, aggravates its image problem among ordinary Sarawakians.
Thus, while it may have been left with little choice but to initiate the legal challenge to seek clarity about its role in the industry, not just in Sarawak, but potentially nation-wide, Petronas needs to be careful and watch the popular reaction in the state to its move.
Ultimately, of course, this boils down to politics. In this, perhaps there is a silver lining in the fact that we now have a new Federal administration which can potentially shift the public discourse over this matter by starting on a relatively clean slate.
Whatever the outcome of the legal challenge, it cannot and should not be seen as a victory or loss for any party involved. It should have been clear right from the outset that as a nation, we are all in this together.
It is thus, incumbent on Putrajaya to pick up the pieces and initiate a dialogue with the Sarawak government to explore new ways of moving forward that will truly be win-win for all concerned. This will require giveand-take by all sides.
The Federal government and Petronas must move beyond mere good intentions and words in recognising the legitimate aspirations of Sarawak to play a far more active role in the industry than is currently the case.
The Sarawak government, assuming the legal challenge reaffirms Petronas’ position in the industry, must henceforth work on the basis that rather than a hindrance, the national oil corporation, being the highly reputable corporation that it has grown to become, is the indispensable ally to help the state realise most, if not all, its hopes for the industry.
There really is no time to lose over such a major issue. The sooner it is resolved the better, given the risks of it being held hostage by various conspiracy theories about how PDA 1974 came about or worse, by those with other agendas about Sarawak’s place within federation.
Sarawak, which has set up Petroleum Sarawak Berhad (Petros) as almost the exact state copy of Petronas, has let it be known that the new state entity will assume full control of the industry in Sarawak on the state government’s behalf by as early as next month.
The writer views developments in the nation, the region and the wider world from his vantage point in Kuching, Sarawak.