Malaysiakini News

CM: Sabah entitled to 40pct oil tax, 20pct royalty based on production

Published:  |  Modified:

Chief Minister Shafie Apdal has insisted that Sabah is constitutionally entitled to 40 percent in tax revenue as well as 20 percent of royalty from the state’s oil production.

According to The Malaysian Insight, he will soon be meeting Prime Minister Dr Mahathir Mohamad and Economic Affairs Minister Azmin Ali to discuss these demands.

“The demand on 40 percent revenue sharing must be realised.

“The federal government has been collecting a lot of taxes and levies from Sabah, but we have never complained. We don’t mind our wealth being shared with the other states.

“But we only demand 40 percent of what has been taken from us,” Shafie was quoted as saying.

A further 20 percent of royalty from gross production was a “fair demand” as Sabah was responsible for almost half of the country’s total oil and gas production, he added.

According to Shafie, Sabah received just RM7 billion in oil royalties in 2013 despite how Putrajaya had raked in RM32 billion from Petronas that same year.

As for oil taxes and levies, he added that the federal government had for the last 44 years paid the state the same amount - RM23 million per year - despite a rise in global prices.

The Federal Constitution states in Article 112C and D that a review of taxes paid to Sabah and Sarawak must be done every five years, subject to the financial position of both the federal and state governments.

The Parti Warisan Sabah president said the state sorely needed development funds and wanted to create more job opportunities for Sabahans so they would not need to leave home to find work.

“I had a meeting with the Petronas president (Wan Zulkiflee Wan Ariffin) recently. I cannot reveal in detail what we had discussed about, but I have made the state cabinet’s decision clear to him that the payment must be based on gross production, not profit.

“I will soon meet the prime minister (Dr Mahathir Mohamad) and the economic affairs minister (Azmin Ali) on this,” Shafie was reported to have said.

Azmin previously told Parliament that Petronas may cease operations if the 20 percent oil royalty were paid based on gross production to oil-producing states, instead of net profit.

Sabah welcomes project deferment

Meanwhile, Shafie, who is the Semporna MP, said he agreed with Putrajaya’s decision to defer the Trans-Sabah Gas Pipeline, a project under Suria Strategic Energy Resources (SSER). 

“Of course, we welcome the decision as we are aware of the financial health of the country and (its) mounting debts.

“Maybe at this point, the project cannot be done. Who knows, the project may be continued when the federal government is financially sound in future,” he told the news portal.

Mahathir has announced the deferment of the RM4.06 billion gas pipeline project during his trip in Beijing, criticising the former BN administration for agreeing to a contract where money was paid based on a timeline rather than progressive work completion milestones.

“I have never heard of a contract where you pay on time without work (being) done. Normally, we pay according to the work done. What kind of stupidity is this?” he had questioned.

Finance Minister Lim Guan Eng previously revealed that only 13 percent of the project had been completed despite how 88 percent, or RM3.5 billion, had been paid to Chinese contractor firm China Petroleum Pipeline Bureau (CPPB). 

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