SABAH STATE LEGISLATIVE ASSEMBLY SPEAKER REJECTS CALL FOR INCREASED PETROLEUM ROYALTY

Sabah BN rejects call for increased petroleum royalty

KOTA KINABALU August 22, 2011: A motion asking the Umno-led Barisan Nasional state government to demand increased payment of the petroleum royalty to Sabah has been rejected by the State Legislative Assembly Speaker, sparking accusations of cowardice from an opposition member.

Luyang state assemblywoman Melanie Chia took the state government to task for failing to protect the rights and interests of Sabah, now the poorest state in the country.

She said this was evident from the rejection of her motion requesting the state government to review the agreement on the petroleum royalty and demand it be increased to 20% from the current 5%.

“I feel disappointed and am not satisfied with the rejection based on the reasons given by the State Assembly speaker

“The motion which I intended to bring to the state assembly was based on the pleas of the people of Sabah to ensure that their rights and interests are defended.

“The rejection of this motion also confirms that the BN government is not serious about the claim on the rights of the people of Sabah,” she said.

Speaking to reporters at a news conference held at her office here, Chia said she submitted the motion to the Speaker on Aug 12 for it to be tabled at the State Legislastive Assembly sitting on Aug 22 and 23.

However, on Aug 19, she received a reply in writing signed by the secretary of the state assembly informing her that the motion has been rejected by the Speaker with two reasons.

The first is that national oil company, Petronas, is currently investing billions of ringgit in development projects in Sabah, which give tremendous benefit to the people of Sabah either directly, or through their spin-off economic activities.

Natural resources

Among these projects are the Kimanis oil and gas depot, the gas power plant at the POIC in Lahad Datu, and the Ammonia and Urea Project in Sipitang.

The second reason is that the agreement on the oil royalty is in accordance with the Petroleum Development Act 1974, which is under the jurisdiction of the federal government.

Chia contended that the motion calling for the review on the petroleum royalty rate from 5% to 20% has no connection with the proposed projects and developments to be implemented by Petronas, or its agents.

“The projects and developments to be undertaken and implemented by Petronas and its agents are investments by the corporation and is not the same as petroleum royalty, which is a state’s revenue.

“The profit (from Petronas investment) goes to the corporation, but oil royalty paid by Petronas is money to the state government, which can be used for direct social economic project to benefit the people,” she said.

Chia, who is also Sabah Progressive Party (SAPP) women’s wing chief, reminded that Sabah is still one of the poorest states in Malaysia and it is therefore fitting that Sabah should benefit further from the natural resources that it is endowed with.

“Its revenue and economic status can be strengthened in the long run for the benefit of the state and its people.

“Natural resources like oil and gas, once exploited, is gone forever. If the exploitation continues, by the next generation, the money is probably no longer there, nor will be the oil and gas. By right, there should be a heritage fund arising from these natural resources,” she said.

On the claim that the change of rate of petroleum royalty is under the power of the federal government, Chia contended that such a notion is not accurate as the petroleum royalty agreement is between the state government and Petronas and does not require any amendment to the Petroleum Development Act 1974.

Changing circumstances

“Legally speaking, it is possible that the agreement be reviewed by negotiation of the parties concerned, that is, via negotiation among the state government, federal government and Petronas.

“This agreement has been in existence for the last 35 years and it is not an unreasonable act to request for a review in view of the current situation and changing circumstances,” she said.

Chia also expressed regret over the fact that such an important agreement that gave away the state’s valuable natural resources in return for a meagre 5% royalty payment was never tabled in the state assembly, which is the highest policy-making body in Sabah.

She showed reporters the Hansards of that particular year to prove that there was a state assembly meeting conducted on the same day the said agreement was signed.

“This is the Hansard of the state assembly meeting on June 14 and nothing was mentioned about the agreement that was signed on that particular day.”

The controversial agreement was signed within days of the infamous “Double Six” air crash incident, which claimed the lives of many Sabah leaders at that time, including former chief minister Fuad Stephens.

Chia said what transpired at that time reminded her of the surrender of the two oilfields found off Sabah dubbed as “Block L and M” by the Brunei government, two years ago.

“We only knew about it (the loss) by accident. There was no information to the people of Sabah that the state government had given away the two oilfields,” she said.

“It is only right that I bring this up in the state assembly to ask the government for a review of the agreement. I feel that we are in the position to ask for more oil royalty because it is an agreement signed with Pertronas. Why can’t the state government do it in the interest of the people?

“The rejection is merely evading an important issue and that is to review the agreement to change the petroleum royalty of 5%, which was signed on June 14, 1976.”

Chia said it was a common knowledge that the people of Sabah have been shortchanged all these years despite being an equal partner with the Federation of Malaya and Sarawak and Singapore (which was later expelled) in the formation of Malaysia.

She wants state leaders to say why they are hesitant to act in the best interest of the state and its people, despite Sabah being dubbed as the “fixed deposit” that had been propping up and maintaining the Barisan Nasional (BN) federal government.

She said SAPP would continue to pursue the matter until a fairer deal is secured for the state and its people, adding that this was only appropriate given that they are the rightful owners of the natural resources found in the state.

Also present at the press conference were SAPP information chief Chong Pit Fah, supreme council member Chia Miu Lee, and vice-Youth chief Simon Chin.