KOTA KINABALU: The federal government will decide within six months on how it can disburse 20% of oil royalty to all oil-producing states in the country, said Economic Affairs Minister Azmin Ali.
Speaking at a press conference after meeting with Sabah PKR leaders here today, Azmin said a Cabinet committee had been formed recently with him as the chair, to study how the current federal government could keep its election promise on the oil royalty.
Currently, he said the federal government is locked in discussions on the matter with the four oil-producing states, namely Sabah, Sarawak, Kelantan and Terengganu.
“We are committed to fulfilling our promises in increasing the oil royalty from 5% to 20%. However, the method must be agreed upon by all the states.
“We have agreed on the 20%, but how it can be implemented must get the consent of the state governments first, according to the Petroleum Development Act 1974,” he said.
Furthermore, Azmin said the issue must also be in accordance with the Malaysia Agreement 1963 (MA63) and the Federal Constitution before any decision can be made.
Azmin viewed the process of listening to state governments’ proposals and recommendations as being more democratic in solving the problem.
However, he reiterated his concern that any decision will have to consider the country’s financial health and also the survival of Petronas.
“We don’t want, because of this, Petronas has to close operations because it failed to pay the 20% oil royalty based on net profit. All these must be discussed.
“No decision has been made yet because consultations are ongoing,” he said.
Oil-producing state governments have insisted on getting 20% payment based on gross production of oil produced in the respective states.
However, Azmin has said that while the federal government has agreed to the percentage, it will be calculated based on net profit.
This has raised concerns because net profit is far less than gross production value and leaders from Sabah and Sarawak have stated that even with 20%, the cash value would be lower than the current 5% cash payment they have been receiving.
Azmin on abandoned school projects
Meanwhile, Azmin has accused the previous government of awarding contracts to inept Umno-linked contractors, leading to abandoned projects in public schools statewide.
“Only 12% of the 83 projects to repair dilapidated schools in Sabah were completed.
“In the meantime, Sabah Public Works Department (PWD) completed all 37 projects it was given.
“The failure to complete the projects by Umno-linked contractors is a betrayal of our children’s future, who are denied access to quality education,” he said.
At the same time, he also highlighted that out of RM184 million funds allocated to Sabah for security purposes, not a single sen had been used to this day.
“There has been no new project designed to improve the security level in Sabah.
“Recently, the state government was given RM600,000 to ensure patrol boats and speedboats have diesel.
“Our security teams can’t even buy diesel. This means that our security assets were not managed responsibly when actually they have RM184 million in funds,” he said.