‘Pay East M’sia its 10% oil royalty’

Group: States entitled to higher payments

KOTA KINABALU: A state right’s body has called on the Federal Government to immediately allow for 10% oil royalty payment to Sabah and Sarawak.

My Sabah spokesman Datuk James Ligunjang said both states were entitled under the Federal Constitution to impose the maximum 10% royalty, adding that there “is no need to wait for new profit or revenue-sharing formulas”.

My Sabah is a grouping comprising Sabahans across the political spectrum seeking state’s rights under the Malaysia Agreement 1963.

Ligunjang said there was a general misconception that the 5% paid by Petronas to oil producing states like Sabah and Sarawak were oil royalties, which he said were actually agreed-upon cash payments under the Petroleum Development Act (PDA) 1974.

“The current deal is 5% cash payment in lieu of royalty based on gross production.

“The payments were to avoid paying a 10% oil royalty owed to oil producing states.

“The Federal Constitution provides for 10% royalty. We should go by the book,” Lingunjang said, adding that talk about profit sharing ratios could be considered at a later stage.

Lingunjang was commenting on Economic Affairs Minister Datuk Seri Azmin Ali’s remarks in Parliament on Wednesday that the 20% oil royalty payment promised by Pakatan Harapan in its election manifesto could not be made immediately as the provisions of the PDA needed to be amended first.

Azmin said that royalties paid to oil-producing states would be based on net profit and not gross value since the latter would have serious financial implications for Petronas and the Federal Government.

Ligunjang, who is a former Petagas assemblyman, accused Pakatan of circumventing the royalty issue, adding that it should respect the Constitution and allow both Sabah and Sarawak to be paid the 10% royalty rate.

“Later, they can work out new formulas agreeable to all parties,” he reiterated.

Ligunjang said should a deal on profit-sharing be done, it should be on a 50-50 basis.

“Petronas will not close shop under such an arrangement,” he added.