A Sabah NGO leader has lodged a police report in Kota Kinabalu today requesting the relevant authority to conduct a detailed investigation on the performance, accountability and transparency of the national oil company Petronas.

Consumer Association of Sabah and FT Labuan deputy president Joshua Kong also called for the setting up of a royal commission of inquiry to conduct a thorough probe into Petronas.

The inquiry should also be on the control and directions of the prime ministers since 1974 as well as the responsibility of the National Petroleum Advisory Council as far as the likely violations of the Petroleum Development Act 1974 (Act 144), Kong said in his report lodged with the Karamunsing police station this morning.

This, he said, is being done in the public interest and public concern over the matter.

In his report, Kong, an accountant, said: “According to the Petroleum Development Act 1974 Act 144, Petronas under section 2 was given the exclusive rights over petroleum in Malaysia, but what have been practised is that other corporations apart from Petronas had been 'allocated' substantial portions of such resources as seen in various Production Sharing Contracts, Joint Venture Agreements and other commercial undertaking as per items in schedules PDA9-14 as attached.”

suhakam roundtable kk sabah 020806 joshua kong He wanted to know if “it is legal that other oil corporations have been likely 'assigned' such rights over the petroleum discoveries in Malaysia?”

Kong also wanted to know under what power, authority, provisions of Act 144 or any other statutes that the exclusive rights of Petronas be shared by others and who had made such an order.

He said that the sharing of such exclusive rights, if true to the supplies of petroleum at predetermined prices (PDA13 item 11) subject to sight of such agreements, can result in tremendous losses to the nation and Sabah in particular, especially when the market price of crude oil is very high in recent years.

Malaysia's portion for Sabah's petroleum ranks the lowest, he added.

He also queried as to where there is provision for a National Petroleum Advisory Council according to clause 5 of Act 144.

Sample of questions

To assist the preliminary investigation, the NGO leader appended a sample of likely questions in appendix A for attention on the performance and violations. “This is my second police report on Petronas & Sabah (P&S) First report ref: KK/rpt/27530/04 21 Dec 2004.”

1) In the absence of detailed accounts since 1974, how would the prime minister control and give valuable directions over the performance of Petronas according to clause 3 (2) of Act 144?

1.2) In the absence of proper accountability and transparency, how would the National Petroleum Advisory Council (NPAC) if any, function accordingly?

1.3) Is anyone from Sabah - one of the oil states being appointed to the NPAC?

1.4) Is there any independent verification process for the payments of oil royalties to the respective oil states?

1.5) Who would be entitled to the oil royalties of oil sourced from Labuan?

1.6) Has the prime minister and his delegates actually review those annual reports with proper detailed accounts professionally, if any?

1.7) Why is Petronas not encouraged to invest in the exploration and production in the oil blocks in Sabah and Sarawak as evident in many Production Sharing Contracts signed with other oil corporations?

1.8) Has the prime minister scrutinise those massive contracts for the oil infrastructure of Petronas in Malaysia and elsewhere?

1.9) Has the prime minister any control over those many overseas investments and purchases/takeovers of oil companies?

1.10) How much financial commitments had been carried out in activities not relevant to the petroleum industries tantamount to abuses of fund?

2) Violations as alleged of the PDA 1974 - Act 144.

2.1) Is the Act 144 being amended to permit Petronas to share its exclusive rights over the oil discoveries as per schedules PDA9-11 as marked *SB* (examples only)?

petronas 2.2) Can the public have access to the agreements of Petronas including the Production Sharing Contracts and Joint ventures to establish the value of such alleged violations?

2.3) Are the 6 option holders as the per item 11 of PDA13 the same parties in those Production Sharing Contracts also known as working interests in PDA9?

2.4) Petronas has been accused of involvement of internal conflicts in some nations and how widespread is this in departure of the PDA?

3) Social obligations to Sabah in corporate social responsibilities

3.1) Please quantify the amount of financial contributions direct to Sabah in such areas since 1976 such as scholarships, sponsorship of public activities and other charities such as disaster reliefs.

Reports content limited

In his report, Kong referred to what the CEO said in the recent media exposures, especially item 10 of PDA12, must be reconciled with the annual reports and substantial historic records. Hence a Royal Commission of Inquiry is needed with the effort of Consumers Association of Sabah & Labuan FT.

“For the aforesaid alleged shortcomings, Sabah deserves to be allocated a special substantial amount much higher than 5% from Petronas directly or otherwise for the reconstruction of the backward state in a special trust fund managed by NGOs. Would this expectation materialise now as per PDA12-14?’

He said the urgency of this case cannot be over-emphasized “as we need to consolidate the performance with greater public awareness and scrutiny”.

The exclusive rights as granted is not a license to ignore good governance and good public accountability for the Malaysians, as it was only in the last 18 years that limited exposure of accounts were published (PDA 14). The recent annual reports and accounts are very limited in content, he stated.