Kelantan state executive council member Husam Musa has urged the federal government to hand over complete control of the state's share of oil royalties and not the federal-controlled wang ehsan (compassionate payment).

This was in view of the 1975 agreement between the state government and federal owned oil-giant Petronas which stipulates that royalty payments must be made twice-yearly directly to the state government.

husam musa bangsar 080408 right Under the agreement, Kelantan is entitled to five percent of oil royalties which has been denied to the PAS-led state government.

"The effectiveness of the federal government in managing wang ehsan is disputable.

"Evidence of this is seen in Terengganu, where the federal government has managed oil royalty for 20 years but failed to reduce high poverty rates," said Husam in a statement.

Should the government insist on disbursing wang ehsan to Kelatan, it should be channeled directly to the state government and a coordinating body can be established, with participation from federal government representatives to monitor disbursement.

'Two discrepancies'

Husam also highlighted two alleged discrepancies in Najib's announcement to the Dewan Rakyat this morning.

First, he denied the premier's claim that Terengganu had been receiving wang ehsan instead of oil royalties as a form of justification because a Petronas media release on June 29 stated otherwise.

"Based on the Petronas official media release, it is clear that the prime minister's statement that payments to Terengganu were in the form of wang ehsan is misleading," he said in a faxed statement.

Secondly, Husam said facts showed that Terengganu, Sarawak and Sabah were all entitled to oil royalties despite the oil-operations being located three nautical miles from the coast, with the exception of Miri, Sarawak.

This is glaringly different from Najib's claim in the Dewan Rakyat that the law only allows Kelantan and Terengganu to claim royalty if the petroleum source was within three nautical miles from their respective shores.

"It is clear that the three nautical mile requirement statement by the prime minister is baseless in the case of Sabah, Sarawak and Terengganu.

"It is merely used to discriminate against the government and the people of Kelantan," said Husam, who heads the state economic planning, finance and welfare committee.

Legal remedies

Additionally, Husam said the state exco meeting this morning decided to appoint a special legal panel to formulate possible remedies for the state government to seek oil royalties.

He said the legal panel will study ways to annual the state's contract with Petronas should the federal government continue to breach the 1975 agreement.

The panel will also look into possible court action outside the country for an injunction against the production of oil in the Malaysia-Thailand Joint Development Area (JDA) and the Malaysia-Vietnam Commercial Area Agreement (CAA).

He added that these suits can be filed overseas because the agreements involved international entities and companies. As examples, he said suits can be filed in Hong Kong or New York courts.

"However, a final decision will only be made after (considering) the opinions of the legal panel," said Husam.

Husam also urged Najib to review the wang ehsan announcement on the principle of fairness, sovereignty of the Kelantan state, the spirit of federalism and out of respect for the state and federal government’s agreement.