Najib to offer oil royalty hike?

Fearing for his future, that of his party and ruling alliance, the PM has come to Sabah bearing gifts, according to Umno insiders.

KOTA KINABALU: Prime Minister Najib Tun Razak, fearing for his future, that of his party and ruling alliance, has come to Sabah bearing gifts, according to Umno insiders.

One of them is an offer of an increase in the 5% oil royalty the state presently gets which the opposition Pakatan Rakyat has pledged to raise substantially if it takes over Putrajaya in the next general election.

According to the grapevine, Najib will announce the increased oil payments the state would receive for outflow of its resources.

However, while no figure was forthcoming, speculation is that the premier would offer “more than 10%” oil royalty to the must-win state for Barisan Nasional and Umno.

Sabah BN coalition partner United Pasokmomogun KadazanDusun Murut Organisation (Upko) said as much recently.

According to party president Bernard Dompok, under the Petronas agreement the royalty payment was set at 10% but was to be split between Sabah and Kuala Lumpur.

“I think the immediate doable figure, to my mind, is 10%. For a start, we can almost have another 5%. This is my thinking. Beyond that there will have to be some negotiation with the oil companies” he was quoted as saying last week.

However, those critical of the move warned that all the offer, counter-offer and wheeling and dealing being made is a sell-off of national assets for political expediency.

“If it is true (raising the oil royalty) then it is a shameless buyout … like a bribe that is not his to give but already belongs to the state,” said a political analyst who added that the rumour of such an offer being made was known for some time.

“They know that people are fed up with this government. Fifty years is a long time and people are thinking its time… change the government, they are saying, and Najib and BN know this and are trying to buy more time with the country’s resources.

“But it’s up to the people… will they buy this? The BN federal government is giving to the BN state … from one pocket to the other pocket … apa macam (what do you think)?

“It will definitely come as a shock that federal is toying with Sabah… its wealth. Now coming begging for another chance. Now is the time for Sabahans … their leaders to twist the dagger,” the person said.

The gift comes even as Sabahans debate the federal government’s role in surrendering Sabah’s oil-rich territories to Brunei as well as their small share in their own resources.

STAR chief Jeffrey Kitingan has urged state government leaders to study the oil agreement carefully as he believes many of them do not understand the underlying commitments of the deal and would be simply going to the negotiating table with the federal government without much thought of the future repercussions of renegotiating Sabah’s oil resources.

Jeffrey said it was crucial that the Sabah government understood that the current 5% the state is getting is a cash payment payable by Petronas under Section 4 of the Petroleum Development Act, 1974 and had nothing to do with royalties.

The cash payment, he said, was in return for the ownership and the rights, powers, liberties and privileges of the oil and gas resources vested in Petronas by the state.

He also pointed out that Section 4 provides that the cash payment is to be agreed between the parties, and not imposed upon.

Jeffrey said Chief Minister Musa Aman should seek the restoration of Sabah’s rights to impose oil royalties, which are provided under the State List of the Federal Constitution and Section 24 of the Land Ordinance, Sabah Cap. 68.

He cited a video recording made in 1975 where Tengku Razaleigh Hamzah, who was then finance minister and headed Petronas, said that royalty entitlement of the states was 12% for up to three miles from the shoreline with the federal government getting 10% for up to 10 miles and 8% to the federal government up to the international boundary.