6-month royalty mechanism study
Published on: Sunday, September 16, 2018
Kota Kinabalu: The Federal Government will decide in six months on how it will distribute the 20 per cent oil royalty to the oil-producing states in the country. Economic Affairs Minister Azmin Ali said he had discussions with Chief Minister Datuk Seri Shafie Apdal on the oil royalty promised by Pakatan Harapan in its election manifesto to raise it from the current five per cent to 20 per cent."We are now fine tuning the suggestions from the State Government on the royalty payment method which can assist in the states development."
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He said the Federal Government was in discussions with four oil-producing states, namely Sabah, Sarawak, Kelantan and Terengganu and a special Cabinet committee has been set up."We are committed to fulfilling our promises of increasing the oil royalty from 5 percent to 20 percent. However, the method must be agreed upon by all the states. We have agreed on the 20 per cent, but how it can be implemented must get the consent of the state governments first, according to the Petroleum Development Act 1974," he said.He was speaking after a meeting with State PKR leaders at the Penampang PKR Headquarters on Saturday.
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Asked how long will the process take, he said and that recently a Cabinet committee was formed to look at how the federal government can fulfil its election pledge on the oil royalty issue. We are given six months to study this proposal and we will come back with recommendations to the cabinet before any decision is made.
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But we also need to consult the Sabah and Sarawak governments on this matter and the issue must also be in accordance with the Malaysia Agreement 1963 (MA63) and the Federal Constitution before any decision can be made.However, he expressed his concerns that any decision will have to also take into account 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 per cent oil royalty based on net profit. All these must be discussed," he said while adding that no decision has been reached yet as consultations are still ongoing with the respective state governments.Meanwhile, Azmin said he also had discussions about the uncompleted public schools projects in the state whose contracts were award to Umno linked contractors by the previous government.He said based on the approved development allocation for 2018 of RM4.1 billion the federal government wanted to ensure the sum is fully spent for development in the State."Priority has been given to the education sector so dilapidated schools in the state can be looked into with the approved allocations. Unfortunately the process carried by the previous regime was not transparent which caused the development of these dilapidated schools to be put on hold. While School development projects carried out by the Sabah Public Works Department (PWD) had gone well with the completion of 37 schools but the 83 dilapidated school projects that were awarded to Umno linked contractors were incomplete with a completion rate of 12 percent only."This 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 adding that he had ordered the ICU and EPU to assist in completing a cabinet paper to ensure that he got a decision to ensure that the approved allocations are channelled directly to the State government for the development of schools and educational institutions in the Sabah.Azmin said he was made to understand also that although the original list was handed over by the then State government for the development of dilapidated schools, when it reached the federal level under the old regime, the location was changed and the schools were set up in areas that had no need for these school but were instead to fulfil the needs of the Umno divisional chiefs of the area."This is also something that the cabinet needs to look into as we want the development of these dilapidated schools to give access to education for our children in each district in the state." Azmin said he also had discussions on the state's infrastructure which needed urgent attention where more that 50 percent of roads in the state have not been paved. As such a reasonable allocation should be set aside to ensure that road works to pave these gravel roads can be carried out as soon as possible to ensure access and connectivity between towns and rural areas.Azmin said another issue where he had a long discussion with the chief minister was on the safety and security matters of the State. "From the RM184 million funds allocation approved for the Sabah this year for security purposes, unfortunately none of this amount to date has been spent and there are no projects identified yet to (improve the security level in the state's territorial waters especially in the East Coast. "Esscom and Maritime are facing problems and the Chief Minister informed me that the recently, the state government had to give RM600,000 just to ensure that security patrol boats and speedboats have diesel.""They (security forces) can't even buy fuel. This means that our security assets were not managed responsibly when they actually have RM184 million in funds (set aside)," he said.On the recent kidnappings of the two Indonesians citizens in State waters in the East coast, Azmin said when he was recently in Hanoi Vietnam for the World Economic Forum, where the Indonesian Foreign Minister asked for the cooperation of the Malaysian and Sabah government to rescue the duo.Stay up-to-date by following Daily Express’s Telegram channel.
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