‘Putrajaya may use creative accounting over oil profit’

KUCHING: If Prime Minister Tun Dr Mahathir Mohamad’s statement on oil issue to reporters outside the Parliament building in Kuala Lumpur on Thursday is to be understood as it stands, Putrajaya might be using creative accounting to calculate 20 per cent of profit instead of the 20-per cent oil royalty, says Parti Bansa Dayak Sarawak Baru ( PBDS Baru) vice president Andrew Puro.

The former senior bank officer even expressed his concern that 20 per cent of profit might be less than the present five-per cent oil royalty received by Sarawak.

He said Dr Mahathir’s statement on the issue, if true, had deviated from Pakatan Harapan ( PH)’s election pledge of giving 20 per cent oil royalty to four oil-producing states in Malaysia — Sarawak, Sabah, Kelantan and Terengganu.

Andrew said such statement from the Prime Minister could deny Sarawak voters the real value of 20 per cent by moving the goal post – so to speak.

“Hence, Sarawak government must address this issue through the Sarawak Legislative Assembly – failing to do so would mean its lawmakers have failed in their duty to fight and protect Sarawak rights, resources and sovereignty,” he added.

Andrew said on the other hand, Putrajaya should not make and dictate terms to Sabah and Sarawak as the latter two are equal partners of the federation when Malaysia was formed back in 1963.

He added that if Sarawak and Sabah continued to be treated like any other states in Peninsular Malaysia, there would be no point for the two nations in Borneo to be in Malaysia.

On Thursday when answering a supplementary question from Rantau Panjang MP Siti Zailah Mohd Yusoff in Dewan Rakyat earlier on oil royalty, Dr Mahathir said there would be no deviation from PH’s promise of giving 20 per cent royalty to oilproducing states in the country.

The prime minister also confirmed that Sarawak and Sabah would receive the 20 per cent royalty after Kapit MP Datuk Alexander Nanta Linggi sought confirmation from him if the two states would be included in the royalty payment.

However, he seemed to clarify his earlier statement later by saying that the 20 per cent payment would be based on profit instead of royalty.

PH, in its 14th general election manifesto, had promised to increase royalties for all petroleum producing states to 20 percent.

It is understood that royalties or cash payouts as per Petroleum Development Act 1974 ( PDA 1974) are costs charged to revenues, rather than a share of operating outcomes.

Whatever income Petronas or oil operators get from selling oil and gas, royalties are entitled to the first cut.

To illustrate, a barrel of oil sold for US$ 100 would see US$ 5 or US$ 20 (depending on the percentage) immediately taken away as royalties.

Only what is left after that and taxes, would remain for Petronas to recover its tremendous capital and operating costs, and to reimburse other oil operators and producers.