Royalty: Sabah was not consulted
Published on: Friday, July 27, 2018
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Kota Kinabalu: Deputy Chief Minister Datuk Seri Wilfred Madius Tangau expressed unhappiness with the Federal Government for deciding and announcing about oil royalty without first consulting oil producing states, including Sabah. He stressed that the need for mutual agreement was clearly stated in the Petroleum Development Act 1974.

He was commenting on reports quoting Economic Affairs Minister Datuk Seri Mohamed Azmin Ali as saying that the Federal Government could not immediately implement its promise to pay 20 per cent royalty to oil-producing states as the PDA carries out calculation based on gross profit and not net profit.

He said the Federal Government will only implement its promise after amendments are made to the PDA 1974.

However, Madius suggested there is need to further discuss with Sabah on the matter.

"The Chief Minister and I were initially happy when hearing about the 20 per cent announcement by Prime Minister. We were happy for Sabah.

"But when further clarification were made that it was based on profit and then, we say 'hello', we need to talk.

"This has to be mutually agreed. You can't just make a unilateral announcement and decision on something that we have not agreed because the PDA says so, that there has to be a mutual agreement," he said after opening the Sabah-Petronas Strategic Industry Conversation and Engagement Forum.

He also reiterated his call for Petronas to report directly to Parliament to ensure the oil company is transparent to the public.

"Petronas is not a public listed company and a lot of what's happening in the company is not public knowledge.

Its annual report should be tabled in Parliament," he said.

He said at the moment the PDA does not provide such provision.

"Perhaps, the PDA should be amended so that the annual report can be tabled in Parliament.

With this, the Members of Parliament and the people will be aware of what's happening in Petronas, financially and in terms of its corporate involvements," said Tangau.

Meanwhile, the State Government has set up a taskforce on oil and gas to boost development of the industry in the state.

Tangau said the taskforce is spearheaded by the Sabah Oil and Gas Development Corporation Sdn Bhd (SOGDC) under the leadership of its Chief Executive Officer Abdul Kadir OKK Haji Damsal.

"The oil, gas and energy sector has been one of the important contributors in Sabah's economic growth with the industry recording more than 20 per cent share of the state's Gross Domestic Product (GDP).

"Despite this fact, Sabah has to design well-equipped strategies to face many future challenges in sustaining oil and gas production, expanding the value of downstream production and services, and diversifying sustainable energy," he said when opening the Sabah-Petronas Strategic Industry Conversation and Engagement Forum, Thursday.

The forum is the first ever collaboration between the ministry, Petronas and SOGDC in the effort to strengthen the oil, gas and energy industry in Sabah.

It aims to foster greater strategic collaboration between the state and the national oil company in facilitating the development and growth of the industry's aspiration in Sabah.

Tangau said it has been Sabah's long term agenda to involve in the value chain of the oil, gas and energy industry.

He noted that in past years, there have been a number of significant development in the industry such as the Sabah Oil and Gas Terminal, the Malikai Deepwater Oilfield and the Petronas Chemicals Fertiliser Sabah Sdn Bhd plant in Sipitang Oil and Gas Industrial Park (SOGIP).

He said the state government has also embarked on two other investment project proposals to further develop the industry.

"The two proposals currently getting serious attention by the ministry are the development of the second ammonia plant with estimated investment value of USD800 million of more, and the Integrated Liquid Bulk Terminal with an estimated value of USD500 million," he said, adding that both will be implemented by well-established international companies.

He added that to facilitate the development of the oil and gas downstream activities in Sabah, an additional volume of 200 mmscft natural gas has been requested by the state and currently being deliberated in the Sabah State Government – Petronas Joint Working Committee. - Leonard Alaza


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