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'Yes' to Petronas stake move

Published on: Saturday, April 26, 2014

Kota Kinabalu: Several Chambers of Commerce and Industry in Sabah are all for suggestions that the State Government seek a stake in Petronas - including a permanent place on the Board - instead of endlessly clamouring for higher oil royalty but getting nowhere.

They believe it is timely for Sabah to receive higher returns on its contribution to the country when its natural resources had been exploited for so long and developed.

An online portal recently reported that Chief Minister Datuk Seri Musa Aman is contemplating seeking a stake for Sabah in the conglomerate in which the Federal Government is presently the sole shareholder.

A source close to Musa claimed he had "sent out feelers" to Putrajaya and is waiting to see the Federal Government's receptiveness to the idea.

The source said Musa is aware of the clamour by both the Barisan Nasional components as well as the opposition for a review of the current five per cent oil royalty and thinks it is more profitable for Sabah if the State had a stake in the conglomerate which is a Fortune 500 company with diversified interests and investments around the world.

Sabah currently contributes a little over 25 per cent of Malaysia's crude oil production, which is about 650,000 barrels per day.

The portal also reported that the move could see Sabah and Sarawak earning more in dividends than the 20 per cent that Pakatan Rakyat promised to oil producing states during the 12th general election if it formed the Federal Government.

Malaysia Malay Chamber of Commerce (DPMMS) Sabah branch Chairman Datuk Awang Buhtaman Awang Mahmun said any move to get equity in Petronas is acceptable and is another option to asking for more oil royalties.

He said he fully supports Musa's move to address the hot issue in the State, if this was the case.

Buhtaman, who is a successful businessman, said the amount of shares must be reasonable and mutually agreed by parties.

"The shares given to Sabah should be based on our contributions to Petronas on the waters and mainland like the Sabah Oil and Gas Terminal (SOGT) in Kimanis, Papar, Sabah Ammonia Urea (Samur) project in Sipitang and the oil rigs in Sabah waters.

"As for the amount of shares, I believe it is too early to state but under a normal business proposition or model, usually the business owners should get equity of 30 per cent while those that work on the assets will get 70 per cent shares.

"So, for example, Sabah has the land and resources which makes us the owner and the other party like Petronas is getting bigger percentage as the conglomerate uses its capital to realise the projects and offshore exploration of oil and gas," he said.

On offshore oil exploration, he said the amount of shares must be based on anything historically under the territory of Sabah prior to the formation of Malaysia.

Sabah Indian Chamber of Commerce and Industry (SICCI) President Dr Victor Suppiah, who also expressed full support, described Musa's move as an intelligent approach and that it is timely to ask for a good deal from the Federal Government that benefits Sabah and the people.

"We fully support the Chief Minister for his initiative in seeking a stake in Petronas and we truly thank him for his immediate action to address the matter for the people in Sabah.

"In fact, I believe this should have been done a long time ago by previous leaders as the State has been giving so much contribution like providing lands and allowing the conglomerate to come in Sabah and carry out development works. But I guess better late than never (referring to Musa's move)," he said.

Dr Victor said it is also high time for the Federal Government to give higher returns to Sabah by advising Petronas to give a fair amount of shares to Sabah in order to get higher dividends.

In fact, he said, giving some equity to Sabah would also mean rendering appreciation to the State Government after a long time.

"Some in Sabah are not happy with what they are getting from the Federal Government which they perceived as small compared to what Sabah has given to them (Federal). So, by giving Sabah shares in Petronas it is a timely step to give higher returns to the State and people to enjoy a little bit more," he said.

KadazanDusun Chamber of Commerce and Industry (KCCI) President Bonny Blasius said he would only agree to getting shares in Petronas if the amount at stake is reasonable and profitable.

"Making attempts to ask for a stake in Petronas is better than claiming for higher oil royalties because a lot of processes and consultations that need to go though like reviewing the Petroleum Development Agreement and even the Malaysia Agreement I am sure will take long, long time.

"So what the Chief Minister's is doing in taking such initiative is commendable because I believe that it is better to negotiate than going for a confrontation.

"Like what he (Musa) said before that it's better 'less talk but more action'," he said.

Meanwhile, Bingkor Assemblyman Datuk Dr Jeffrey Kitingan said Musa should make a clear stand of the government's intention.

"The Federal and State governments should realise that they cannot take the people for granted and that the oil and gas resources belonged to Petronas and the Federal Government.

"The federal Parliament had no business and no jurisdiction to legislate and pass the Petroleum Development Act, 1974, when it was clear that land and mineral resources including petroleum and gas remained under the State List in the Ninth Schedule of the Federal Constitution.

"Under Section 24 of the Land Ordinance (Sabah Cap. 68), the petroleum and gas resources belonged to the Sabah Government," he said.

Jeffrey said it was under dubious circumstances the then Chief Minister signed the Oil Agreement on June 14, 1976 agreeing to accept five per cent cash payment for the oil and gas resources from Sabah and further agreeing to waive all collections of royalties payable to the Sabah government under Section 24 of the Land Ordinance.

He said the 1976 Oil Agreement was signed without any discussion and mandate from the State Legislative Assembly as the resources belonged to the Sabah Government and not to the then Chief Minister.

"If the Sabah leaders diligently check the history of oil in Sabah and the Hansard of the State Legislative Assembly, they will find that in 1971 it was declared that the Sabah Government had signed five petroleum agreements with oil companies and were entitled to 12.5 per cent in oil royalties in addition rents for the areas involved.

As for the speculation of asking for shares in Petronas, it is the legal right of the governments of the oil producing States, Terengganu, Kelantan, Sabah and Sarawak, to be entitled to full ownership of Petronas.

"Petronas is what it is today, due to the oil and gas revenues generated from the oil producing States.

Of course, giving credit where it is due, the management of Petronas, past and present, ought to be commended for their efforts in transforming Petronas to what it is today" said Jeffrey.

"If the past history of distribution of oil revenue is any gauge, 95pc of Petronas' shareholding should be given to the oil producing States and the remaining 5pc shares be given to the federal government as a gesture of goodwill by the oil producing States," he said.