Dr M: Oil royalty rates should not be at Petronas’ expense
KOTA KINABALU: Prime Minister Tun Dr Mahathir Mohamad said while there is a need to review the oil royalty rates for oilproducing states, it should not be at the expense of “killing” Petronas.
Dr Mahathir, when asked on how soon the increase in oil royalty to oil-producing states from five per cent to 20 per cent would take place, said it had to be done without Petronas incurring losses.
“We do not want to kill Petronas.
“While we feel there is a need to re-look the five per cent (oil royalty), we need to maintain Petronas’ strength,” he said.
Petronas, he said, was a unique company because it was the only national oil company that undertook exploration, development, production into petrochemicals, making it sought after by industries worldwide.
“That five per cent is based on operational cost. It is part of it and is a big amount.
“If we take away 40 per cent of the operating cost, for example, Petronas will lose money.
“So if you reduce Petronas to just collecting royalty, we lose a lot of things.”
When asked if the Federal Government would consider giving up its five per cent royalty to the states in question, he said the Federal Government was already giving money to the states.
“In fact, many states owe money to the Federal Government in the form of non-performing loans,” he said after a breakfast meeting with Sabah Chief Minister Datuk Seri Mohd Shafie Apdal and state ministers here.
He said the key was for states to be fair to each other.
Sabah, he said, had improved since he first visited the state in 1965.
“I see so much progress has taken place over the years. There is evidence that Sabah is capable of growing rapidly.
“What should be done is to identify Sabah’s assets that can be capitalised on.”
He said Sabah had the potential, but was hampered in the past by corruption.
“But I think that will stop because I intend to adopt the Chinese law where we shoot people,” he joked.
Dr Mahathir said there were several factors that contributed to the high cost of living in the state, including the cabotage policy and transportation costs.
He said Sabah and Sarawak should work together to develop an assembly business for the automotive industry as they had the population volume.
“This may bring down costs. Sabah also has the potential to become the world’s biggest petrochemical producer because deepwater production will begin soon.”