CM: State will continue to push for oil royalty

THE state government will continue to push for oil royalty hike and negotiate with Petronas to enhance the participation of Sarawak companies in the oil and gas industry.

Chief Minister Datuk Patinggi Tan Sri Adenan Satem assured the august House that despite the uncertainty of the oil market, the state government’s negotiation on the increase of oil royalty from five to 20 per cent with the federal government and Petronas would continue.

“In fact, we have made some progress in five key areas, namely the natural gas supply for both power and non-power sectors, equity and royalty, contracts and business opportunities, corporate social responsibility and human resource, education and technical trainings,” he said in his windingup speech yesterday.

On the supply of natural gas, he said Petronas had signed five agreements to support the development of power and petrochemical industry in the state.

“Through these agreements, Petronas has committed to supply 450 million standard cubic feet per day of natural gas to Sarawak for the development of power and nonpower sectors in the state. We will continue to negotiate for the supply of more natural gas from Petronas for our downstream activities,” he said.

With the availability of natural gas in Sarawak, Adenan said he was optimistic that it would attract more petrochemical industries to invest in the state, especially in Bintulu.

“This will support our industrialisation strategy to transform Bintulu to become the leading petrochemical hub in Malaysia. We believe that the Sarawak Petrochemical Master Plan will also help us to develop our petrochemical industry in a strategic way to benefit the state.”

The state government, he added, was also in active discussion with Petronas on the details of the Shareholders Agreement on the 10 per cent equity in the Malaysia Liquified Natural Gas ( MLNG) Plant Train 9.

“We are also working with Petronas for more equity in MLNG 2 Plant besides pursuing more contracts to be given to Sarawak companies.”

Adenan re- emphasised that the state’s equity in MLNG projects were Sarawak’s privileges as not everybody could participate in the projects.

“In this regard, Petronas has committed a baseline value of RM2.1 billion worth of contracts annually to be awarded to Sarawak companies. Since 2013, Petronas has already spent RM14.8 billion worth of contracts to Sarawak companies.

“As for the number of Sarawak licensed or registered companies with Petronas, it has increased from 314 in 2013 to 396 in 2016.”

For corporate social responsibility (CSR), Adenan said Petronas was committed to spend RM50 million over five years (2015 to 2019) for 10 projects.

“Currently, eight projects have started and are ongoing namely the development of community centre, Sarawak Regatta, contribution to NGOs, mobile CSR, Penan pre- school, emergency aid, and Petronas marine conservation.

“Another two projects will start soon namely Petrosains Playsmart and Rest and Recreational areas,” he added.

In the area of human resource, education and technical trainings, Adenan said Petronas would continue to intensify education and human capital development efforts in Sarawak.

Petronas, he added, was expected to spend RM465 million, exceeding the budget of RM420 million meant for five years (2015 to 2019) on capital expenditure for the construction of the new MRSM Bintulu, implementation of Asrama Desa projects and educational sponsors and capacitybuilding for students.

He said 3,880 Sarawakians or 75 per cent of the total workforce were being employed by Petronas for its Sarawak operation covering both upstream and downstream activities currently.

“However, after negotiation with Petronas to increase the number of Sarawakians working with Petronas, it has charted a roadmap to recruit and develop more Sarawakians to achieve the targeted job level of 85 per cent Sarawakians by 2020.”

The Localisation Plan, he added, was developed to increase the number of qualified Sarawakians in Petronas through structured succession planning and new recruitment through advertisement.

“The structured succession planning of Sarawakians filling up positions on non- Sarawakians is ongoing since September 2016. For the new recruitment, 192 vacancies (meant for Sarawakians) were advertised in local newspapers on Oct 22.

“As of Nov 8, Petronas has received 10,416 applications (including non-Sarawakians) and the shortlisting is in process.”

Sarawak had continued to strengthen economic resilience through various measures over the years and moving forward, there would be challenges to be addressed arising from uncertainties in the global economy and the slowdown of the national economy.

“Despite these challenges, we need to accelerate our economic growth especially in achieving our vision to become a high income and developed state by 2030.”

To achieve this vision, he said efforts were being carried out through the Socio-Economic Transformation Plan ( SETP) to accelerate income growth and reduce income disparity among the people.

“Under SETP for the state to achieve high income status, the economy needs to grow at 6.5 per cent per annum. Our economic growth in 2015 was 3.7 per cent and is expected to grow 3.5 to 4.0 per cent in 2016.

“The projected growth takes into consideration the weak prices of our export commodities. However, as the world economy is expected to recover in 2017, the state economy is projected to experience better growth of 4.0 to 4.5 per cent.”

The slower economic growth, Adenan said, thus called for adjustments in the state economic policy and this required some form of intervention in government strategies and expenditure.