Seek ‘win-win’ solution to address O&G issues, says Hashidah
KUCHING: The federal and Sarawak government must seek a ‘ win-win’ solution to address the ownership issues and redress the economic parity in the distribution and sharing of revenues derived from Sarawak’s oil and gas resources within the ambit of the Malaysian context, in the true spirit and intent of Malaysia Agreement 1963 ( MA63).
Therefore, an agreement must be achieved before the situation escalates out of control, said Assistant Minister of Law, StateFederal Relations and Project Monitoring Sharifah Hasidah Sayeed Aman Ghazali.
“The federal government via YB Datuk Seri Azmin Ali on July 25th 2018 stated in Parliament that the promise of increasing the oil and gas ‘royalty’ to the oil and gas producing states (including Sarawak) from five per cent to 20 per cent was actually not true. It was revealed that the 20 per cent refers to the percentage of net profits, not percentage of royalty as commonly described in the oil and gas industry, including as prescribed in the PDA74 ( Petroleum Development Act, 1974).
“This is indeed a departure from what was stated in their manifesto, Buku Harapan. YB Azmin also mentioned that any proposed changes in the distribution of revenue to the producing states could only be implemented after the PDA74 is amended and would take time,” Sharifah Hasidah pointed out.
She stressed that Sarawak stood firm on its ownership and regulatory rights over all oil and gas resources and activities in Sarawak effective July 1 this year as prescribed under the recently passed Oil Mining (Amendment) Bill 2018, with the aim for Sarawak to assume full ownership, regulatory and licensing authority over its oil and gas resources, serving the best interests of Sarawak and its people.
She said the OMO amendment came into effect on July 1 and Sarawak is giving all stakeholders until the end of 2019 to comply with the new regulations.
“As such, the Sarawak government calls for all stakeholders to refrain from unilaterally dictating or exercising any ownership rights to Sarawak’s oil and gas resources including distribution of revenues unless and otherwise prescribed under Sarawak’s Oil Mining Ordinance.
“This includes the presumptions that any percentage of royalty or percentage of net profits, for that matter, is equitable and enforceable in the current effort by the federal government to redress the allocation of revenue (ironically termed by YB Datuk Seri Azmin Ali as ‘distributive justice’) specifically to Sarawak.
“Any terms of such agreement must be determined by and with the rightful owner of the oil and gas resources, which is Sarawak. Sarawak will not be dictated to by anyone, not even the federal government, with regard to Sarawak’s own oil and gas resources,” she stressed.
In the same vein, Sharifah Hasidah emphasised that it is also presumptuous to assume that any remedy in the distribution of revenues between Sarawak and the federal government will have an adverse impact on any of the stakeholders, including Petronas, without firstly taking into consideration adjustments to the stakeholders’ contributions to the federal government in terms of existing royalty, profits, taxes and dividends, which effectively give the federal government 92 per cent of all oil and gas- derived revenues and Sarawak only one per cent.
“An increase from five per cent to 20 per cent of the gross production will only mean five per cent of total oil and gas revenues to Sarawak, with 88 per cent still going to Petronas and the federal government. This is clearly inequitable,” she pointed out.
Sharifah Hasidah further reminded the federal government on the need for sustainability and ‘robust economic multiplier’ effects of national oil and gas exploitation policies and strategies in relation to Sarawak.
“After 42 years of one- sided exploitation, Sarawak needs a holistic approach to redress imbalances of inequitable sharing and distribution and poor value creation for Sarawak. This requires adjustments to legal, policy and eco- system synergy, i. e. more equitable participation amongst federal and state level entities, otherwise the federal government’s so- called ‘distributive justice’ will only be a meaningless catch-phrase,” she said.
She also found it very disheartening to be informed that the federal government’s manifesto was devised based on the analysis of cost structures that was constrained by limitations of available oil and gas data ( presumably from Petronas).
“I would like to urge the federal government, through Petronas, to provide the relevant stakeholders access to such data in order to analyse and devise the equitable distribution of oil and gas revenue to its stakeholders,” she said.
Sharifah Hasidah insisted that Sarawak is not against sharing its oil and gas resources with the rest of the nation and has done so without complaint for the last 42 years since the formation of Petronas.
“But the federal government must realise that Sarawak needs to develop its own ‘ InCountry Value Creation Model’ and endeavour to apply it for a more generative formula to create healthier participation by Sarawak companies, so that not all business opportunities are channelled to Malayanbased companies by way of huge ‘ Umbrella Contracts’ currently awarded by Petronas,” she argued.
Sarawak, she stressed, felt very strongly that the current Petronas model of ‘ federalising’ the economic perspective towards maximising revenue collection for the federal coffers did not work.
“This approach has proven to impoverish the states with the oil and gas resources and there has been no coherent masterplan in place even until today to ensure growth of a healthy state oil and gas sector.
“Sarawak and Sarawakian economic interests have been sidelined for too long and the state is not solely to be blamed for this situation, with Petronas playing the role of an ‘exploiter’ rather than a sustaining ‘value- creator’. It is sad to note that the recent moves by Petronas and now the new federal government itself hardly seems to indicate any different thinking or change to this stance. This is unacceptable. Sarawakians can no longer tolerate such economic inequity and imbalance, especially with Sarawak being the real owner of the oil and gas resources,” she concluded.