4.) IV. TIME for STATE CONTROL OF OIL AND GAS RESOURCES

IV. TIME for STATE CONTROL OF OIL AND GAS RESOURCES

Mr. Speaker, the concept of a federation of partners is for resources and wealth to be shared. It can only be on the basis of equitable sharing that a Federation can grow and progress in a dignified and meaningful manner for all the partners.

For several decades now Sarawak, along with Sabah and Terengganu, the states endowed with enormous oil and gas resources, has over-accommodated herself to the well being of the Federation. The average daily output from Sarawak fields amounts to some 128,600 barrels of crude, and 2.94 billion cu. ft. of LNG. For the decades past, the Federal BN Government has arrogated to itself our state’s vast oil wealth! To the detriment of the peoples of Sarawak, there has been no equitable sharing. The tragic proof is the acknowledged development gap between East and Peninsular Malaysia.

The massive resources were signed over to the federation by the State government, so that it may be better managed by the national corporation, PETRONAS. Over the last 20 years or so, Sarawak received just 5% of the national oil and gas revenue.

Mr. Speaker, the Federal Government, through PETRONAS, has utterly failed in responsible stewardship of our invaluable resources. Deliberate policy aberrations, especially using PETRONAS repeatedly to bail out other failed corporations, are in violation of the trust Sarawak vested on the Barisan Nasional controlled Federal Government. The State Barisan Nasional Government has all along stood in silent consent and in blatant dereliction of their mandate to oversee and safeguard the judicious use of our oil and gas wealth.

PETRONAS has gained massively from the rise in world oil prices as Malaysia is a nett oil exporter; so should have the Government revenues jumped. In the financial year to 31st Mar. 2006, Petronas raked in over RM 70.2 billion in pre-tax profit, a 21% increase over the RM 58 billion of the previous period. After- tax profit amounted to RM 43.6 billion, an increase of 22% over the RM 35.6 billion of the previous period.

The Case for Increasing the Royalty from 5% to 20%

Currently distribution of the gross value of the petroleum as prescribed by the Petroleum Development Act is as follows:
Government of Producing State 5% royalty on gross value of output
Federal Government 5% royalty on gross value of output
Producer company 20% for cost recovery
Total 30%
Producer company 21% (30% of remaining 70%)
PETRONAS 49% (70% of remaining 70%)
100%

The question that begs to be asked is why should we continue to give PETRONAS 49% when it has done nothing for us? Shouldn’t it be us who should be given the 49%?

The issue of increasing the petroleum royalties of the producing states has often been raised. For instance, during the election campaign of October 1990, the CM of Sabah argued that the rate of petroleum royalty to the state should be increased from 5% to 50%!. As for Sarawak, in 1969, the then CM claimed that the Federal Government has orally assured Sarawak that we could have all the revenue from off-shore petroleum in return a lower federal grant. Since most of the petroleum in Sarawak is found off shore, if all revenue accrued to the state government, its revenue would be boosted tremendously! Based on the principle of ownership of the continental shelf by adjoining regions, Sabah and Sarawak could claim ownership before the incorporation of Malaysia in 1963. The status quo could have been maintained insofar as the Malaysian Constitution is silent on the matter. Thus the claim to its ownership by the Federal Government may be construed as an annexation! (See Sabah and Sarawak in the Malaysian Economy by Wee Chong Hui, 1995).

There is a clear breach of the Malaysia Agreement where the consent and agreement of Sarawak was not obtained. The Sarawak Government should consider taking up the case, legally if necessary to get back Sarawak’s rights over our oil resources.

So the claim for just 20% would be considered quite low and therefore reasonable.

According to the Speech of the Hon YAB CM for the Supply Bill (06) 05, the state government has been paid a total of RM1.1671 billion for the year 2005 for its 5% royalty. It is expected that from 2006 onwards we shall get at least RM1.2 billion a year in royalties. If we are able to raise the royalty payment to 20% then it would result in a massive RM4.8 billion, or a surplus of RM2.2 billion after we deduct the Annual Budget which is currently costing us for the current year a total of RM2.645 billion.

What can we do with RM2 billion a year you might say!!!

But first before we think about spending the RM2 billion, we can already do away with the 10% tax for 4D, which took from us a sum of RM80 million, do away with the 5% State Sales Tax which cut into us a sum of RM163 million and we can also do without land premiums which is netting the government a sum of about RM180 million annually! Sarawakians will for the first time really enjoy the fruits of Sarawak! With the lifting of such taxes. And on a short calculation, the 80 million plus 163 million plus 180 million which now we are taking from the people of Sarawak, if we want to give it back to the people of Sarawak will save every Sarawakian an average of RM192 a year.

And with the RM 2 billion a year, we can subsidise petrol prices at the pump and keep it to the pre 2000 figures or before the latest round of price increases! With the RM2 billion a year, we can contemplate improving our really atrocious public transport system in Sarawak.

We can even contemplate a rail and light rail transport in Sarawak, beginning in the densely populated Kuching, Padawan, Serian region. Or, more cheaply, in a Rapid Transit Bus Network system, currently introduced with great success in some foreign cities.

A safer double lane international grade highway from Lundu to northern Sarawak, with double lane feeders into larger towns, can be planned and be built in the next 10 years!

I therefore call for A TOTAL REVIEW OF OUR OIL, GAS AND ENERGY POLICY!

And I urge the Sarawak Government that is now across the floor, to hear this plea of Sarawakians. Please stand up for Sarawakians. Please fight for our rights!

The State BN Government must put it to the Federal BN Government to set an immediate timetable for the either the return of Oil & Gas Resources to Sarawak, or to give us 20% in royalty. When there is a political will there is a political way!