Prime Minister Dr Mahathir Mohamad should explain why it was a "mistake" to give five per cent in oil royalty to Terengganu, according to an opposition figure.

DAP chairman Lim Kit Siang said Mahathir should explain the legal and constitutional basis that made him come to the conclusion that it was a "mistake" in giving the oil royalty to Terengganu.

Recently, the Prime Minister stated that the government would study whether Terengganu had the right to oil royalty and whether it was a part of the federal government's agreement with the state signed in 1975.

"Did Mahathir consult the Attorney-General, Petronas and other legal experts before coming to the categorical position that Terengganu is not entitled to the five per cent oil royalty?" he asked.

According to Lim, the Mahathir must come out with the explanation or the only conclusion the people can draw is that the prime minister is extending his vendetta against PAS and punishing the people of Terengganu for choosing a PAS government in the last general elections.

Lim said that Petronas had, in fact confirmed Terengganu's right to the five per cent oil royalty yesterday.

"Petronas president and chief executive officer Mohamad Hassan Marican said Petronas would continue paying five per cent oil royalty to Terengganu on offshore oil and gas to Terengganu," he said.

Today, local newspapers reported that the prime minister as saying when Terengganu was under Barisan Nasional rule, the government had not considered in detail the rights of the various states to get royalties.

Mahathir said that the federal government agreed to pay royalty then because Terengganu was a small and rural state.

"If Terengganu was given the five per cent oil royalty because of its poverty, why wasn't this 'compassion' extended to Kelantan, which was even poorer than Terengganu?" Lim asked.

The former opposition leader said Mahathir should drop the Terengganu oil royalty issue and show the world that he is fair and will not punish the people of Terengganu by reneging on the federal government's commitment.