By Syauqi Jamil
KUALA LUMPUR: Pakatan Harapan government’s promise to grant 20% royalty to all oil producing states will only be implemented once the Petroleum Development Act 1974 (PDA 1974) is amended.
Economic Affairs minister Mohamed Azmin Ali said Putrajaya needs to also thoroughly study the matter to avoid implicating the Federal government as well as Petronas’ financial situation.
“We could not carry this out immediately as it contradicts with PDA 1974 as the calculations are made based on gross profit, not net profit.
“Therefore, should petroleum royalty increment to 20% be implemented, an amendment must first be made to PDA 1974,” he said today in Parliament.
Azmin said this during his reply to Upko Tuaran MP Madius Tangau who queried the Gombak MP on when the promise of 20% royalty to petroleum producing states will be delivered.
Currently, the royalty paid to four state producing states which is Sabah, Sarawak, Kelantan and Terrengganu are sitting at 10% based on gross value.
Azmin said talks between the federal government, state governments and Petronas would be held to discuss the matter further.
He also said that a special Cabinet committee has been formed that comprises experts from oil-producing states.
“They have six months to study and draft recommendations agreeable to all parties involved, where the findings will later be presented to the Cabinet.
“They will also be assigned to monitor the implementation and to ensure that it is executed in a fair and transparent manner,” he said.
Besides cash payment of oil and gas, Putrajaya is also committed in distributing development allocation fairly between states.
This will be disclosed as a new direction in the 11th Malaysia Plan (11MP) which ia scheduled to be tabled in Parliament in October.
