Dr M’s 20% just a diversion from O&G ownership

KUCHING: The State Reform Party (STAR) Sarawak has called Prime Minister Tun Dr Mahathir Mohamad’s announcement that the Pakatan Harapan (PH) federal government would provide oil-producing states with 20 per cent of profit from their respective areas a mere diversion and distraction from the real issue of Sarawak’s ownership of oil and gas resources.

STAR Sarawak president Lina Soo said according to her understanding, the convention to calculate oil royalties is based upon percentage of gross production and is free and clear of all costs.

“In practice, royalty rates tend to vary from 12.5 per cent to 25 per cent depending upon the negotiation skills of the landowner,” she explained in a press statement yesterday.

Soo said she was stunned to learn Dr Mahathir’s 20 per cent of profit offer would factor in production costs, operational expenditure, and taxes.

“Has the Prime Minister moved the goal post so as to be seen as fulfilling its election promise, yet denying Sarawak voters the real value of 20 per cent royalty by shifting the base calculation from gross production to profit?” she questioned.

“Is the PH government trying to avoid payment to Sarawak by creative accounting?”

Soo urged the Sarawak government to resolve the rights and ownership over oil and gas found in Sarawak’s soil and territorial waters through the constitutional process in the State Legislative Assembly.

“Failing which the elected lawmakers would have failed in their duty to fight for, and protect Sarawak rights, resources, and sovereignty,” she cautioned.

On Thursday, Dr Mahathir had initially said in Parliament that PH would honour its promise of providing 20 per cent royalties to petroleum-producing states but later told reporters the payment would be 20 per cent of the profit.