Kelantan deputy MB rejects Dr M's oil royalty formula

Kelantan Deputy Menteri Besar Mohd Amar Nik Abdullah has rejected Prime Minister Dr Mahathir Mohamad's offer of 20 percent royalty on oil profits made in the state.

Instead, Amar stressed, Kelantan is demanding five percent royalty on total oil production in the state.

He said the federal government basing the calculation on profits instead of production could see volatility in the amount of royalty granted to Kelantan.

"In our opinion, the royalty should not be paid based on profits, as production is more important.

"If oil prices or sales are high, we could get a lot, but if the prices or sales are low, we could get only a little (if oil royalty is based on profits).

"But even if we are only given five percent based on production, we would receive no less than RM700 million a year," he told journalists in Kota Bharu today.

As Amar noted, the five percent royalty was included in the state's agreement with Petronas, on which the Kelantan government's demand is based.

However, he noted that Pakatan Harapan's manifesto had promised to grant the state 20 percent oil royalty.

The BN federal government had stopped payment of oil royalty to Kelantan after PAS took control of the state in 1990.

With a new government installed in Putrajaya, PAS has renewed its call for he payment to be reinstated. - Mkini