PKR wants Putrajaya-Terengganu oil royalty settlement revealed
By Clara Chooi
April 24, 2012
KUALA LUMPUR, April 24 — PKR today demanded Putrajaya reveal the terms of its out-of-court settlement with the Terengganu government and Petronas in the RM2.8 billion suit over oil royalties filed when PAS ruled the state 11 years ago.
PKR secretary-general Saifuddin Nasution asked how much the state government stood to gain from the settlement, saying there would be “no element of finality” to the dispute if the terms are not publicly revealed.
“PKR believes the Terengganu people need an immediate explanation on this latest development.
“An honest and open explanation on the terms of settlement, on how much the Terengganu government is being paid for its oil, should not be too difficult if the government is truly responsible and respects its people,” he told a press conference today.
The Machang MP also demanded to know the actual total of wang ehsan (goodwill payments) and royalties that the Terengganu government has received between 2001 and 2011, taking into consideration that global oil prices had fluctuated from as low as US$20 per barrel to US$100 per barrel.
“And which account were these funds channelled to, the state’s consolidated funds or to fund projects like the Monsoon Cup and the Crystal Mosque?” he asked.
“The public is aware that the federal government’s hesitance over this issue of oil royalties and goodwill payments was born out of Umno’s and Barisan Nasional’s (BN) revenge when they were toppled in Terengganu between 1999 and 2004,” he said.
According to The Edge Financial Daily yesterday, the now BN-led Terengganu government withdrew its civil suit against Petronas and the federal government on March 21 but did not provide details of the out-of-court settlement.
“We are not in a position to explain the settlement terms as these are under the purview of the federal government and the Terengganu government,” the financial daily had quoted Petronas as saying.
But it also cited a senior lawyer who has been tracking the dispute as saying there will be pressure on the federal and state governments “to disclose the details of the settlement and how the payments due to the state under the royalty payments were spent.”
The recent confidential settlement between Tan Sri Tajudin Ramli and national asset management firm Danaharta over RM589 million owed by the former Malaysia Airlines chief also drew criticism from the public and lawmakers across the divide.
Petronas had signed a profit-sharing deal shortly after being incorporated in 1974 where the states of the federation receive five per cent in royalties for fossil fuel discovered in their territories and sold by Petronas.
But when Terengganu fell to PAS in 1999, then Prime Minister Tun Dr Mahathir Mohamad ordered Petronas to rescind oil royalties in September 2000 on the grounds that the opposition party did not have the ability to manage the funds of over half a billion ringgit annually.
The royalties were instead channelled through wang ehsan (goodwill payments) which opposition leaders and some BN politicians have claimed were mismanaged and directed to prestige projects such as the Monsoon Cup and the Crystal Mosque.
Datuk Seri Abdul Hadi Awang’s administration filed the suit in March 2001, insisting the federal government’s orders were illegal as the state’s agreement was exclusively with Petronas.
The case has not proceeded significantly and in 2009, Putrajaya decided to reinstate the royalty payments to the state which had already returned to BN rule.
But the east coast state still demanded RM2.8 billion in compensation for the nine-year lapse, rejecting the federal government’s offer of RM1.7 billion.
Terengganu received RM7.13 billion in royalties for the 22 years up to March 2000 when Petronas halted the payments.
During this period, global oil prices averaged at just over US$20 per barrel but in the last six years, it was US$87.
In August 2010, PAS-controlled Kelantan launched a suit against Petronas for failing to pay royalty for oil and gas extracted within its territory including the overlapping areas with Terengganu, Thailand and Vietnam which has seen joint-development deals with the federal government.
It says it is owed RM800 annually since 2005 but Putrajaya has disputed the state’s claims over the territorial waters where the joint-development projects are located.