Sarawak still holds its rights on oil and gas, says CM

Sarawak Chief Minister Abang Johari Openg.

KUCHING: Sarawak Chief Minister Abang Johari Openg today dismissed the notion that the state had surrendered its rights on oil and gas to Putrajaya, saying no agreement was made between Sarawak and national oil company Petronas over the petroleum sales tax.

He said it was only an understanding that while the Petroleum Development Act 1974 (PDA 1974) would be recognised elsewhere in the country, in Sarawak, the issue would be governed by the Oil Mining Ordinance 1958.

“We have the right to our oil and gas, that was why we went to the court, and the court has ruled that we have the right over these matters,” he told reporters at a press conference here today.

He was responding to criticism over the matter by several opposition leaders and NGOs.

He also said a committee formed under the current federal government and co-chaired by Senior Minister (infrastructure cluster) Fadillah Yusof and Finance Minister Tengku Zafrul Aziz would be negotiating a new “arrangement” regarding the matter.

“The outcome of these negotiations will then be discussed by the Sarawak consultative committee on the Malaysia Agreement 1963,” he added.

In January last year, the Sarawak government imposed a 5% sales tax on Petronas’ petroleum products under the state’s Sales Tax Ordinance 1998. However, the national oil company refused to pay the tax, saying it was unconstitutional, and giving rise to legal action by the state government.

On March 13, the Kuching High Court ruled that Sabah and Sarawak had the right under the Federal Constitution to impose sales tax on petroleum products, dismissing Petronas’ bid to declare the Sarawak state sales tax null and void.

A joint statement by Petronas and the Chief Minister’s Department last week revealed that the national oil company had agreed to pay some RM2 billion in sales tax owed to Sarawak after reaching a settlement over the dispute on the management of oil and gas extracted from the state.

It also said all previous agreements made under the PDA 1974 remained valid and in force.

“Petronas is still recognised as the national oil company that acquires full authority in regulating the development of the oil and gas in the country,” it said.

Earlier, Fadilah said the consensus reached between the federal and Sarawak governments would allow the state government to be jointly involved in developing the oil and gas industry in the state, without changing Petronas’ role as the nation’s petroleum company.

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