Kelantan wants payment to be based on production revenue
KOTA BARU: The Kelantan government believes payment of oil royalty by the Federal Government should not be based on profits, as stated by Prime Minister Tun Dr Mahathir Mohamad, but instead on production revenue.
Deputy Menteri Besar Datuk Mohd Amar Nik Abdullah said the matter was enshrined in a 1975 agreement between Petronas and the state government, which dictated that a five per cent royalty was to be paid to the state and the Federal Government based on production revenue.
Amar, who is the state’s Royalty Claims Committee chairman, said the 20 per cent promised in the Pakatan Harapan manifesto was “something new” and not in the original agreement.
He added that this was also the first time he was hearing about the payment being based on profits.
“The committee will discuss Dr Mahathir’s statement in depth. We will present our views to the Federal Government.
“In any case, our claim in Kelantan is for the five per cent stated in the initial agreement.
“In our view, the royalty should not be paid based on profit because production is more important.
“Profit and loss hinges on business. If petroleum prices are high, or when sales are good, then we will get more. But if sales are poor or the prices dip, we will make less.
“For now, we have yet to do the calculations. However, if the five per cent was based on revenue, then the state would earn no less than RM700 million annually.”
Amar was responding to a question about Dr Mahathir’s statement that the oil royalty promised in PH’s election manifesto would be based on profits.
NSTP had on Saturday reported that the Terengganu government would be studying in detail the 20 per cent oil royalty announcement by Dr Mahathir.
Terengganu Menteri Besar Professor Dr Ahmad Samsuri Mokhtar had said the statement was vague on whether the 20 per cent was based on Petronas’ profits in the state, or the overall revenue after tax.
Amar was also asked on the Education Ministry’s ruling for students to wear black shoes.
“There are bigger issues that deserve attention, such as the workload of teachers, who have been reduced to becoming clerks; the examination-based school system, which neglects critical thinking and personality building; as well as the weight of schoolbags.”
For now, we have yet to do the calculations. However, if the five per cent was based on revenue, then the state would earn no less than RM700 million annually.