Putrajaya today pledged to look into a “fair” distribution of cash payments from petroleum revenue to Pahang, Kelantan and Terengganu, in an apparent move to resolve a long drawn-out dispute over oil income that will likely be used as a key campaign issue in the coming polls.
Prime Minister Datuk Seri Najib Razak (picture) was quoted by Bernama as saying that a special committee will study the cash disbursements within the next six months before making its recommendations to the federal government.
According to the national news agency, the committee will be chaired by former Chief Justice Tun Abdul Hamid Mohamad, and its members will include legal experts from within and outside the country, and representatives from the Pahang, Kelantan and Terengganu state governments consented to by the Sultan of the respective states.
The prime minister was quoted as saying in a statement that the committee would be tasked to identify the states that would be eligible to receive the cash payments from petroleum revenue in the east cost of the Malay peninsula.
“The special committee will also determine the method and quantum of the cash payment to the states concerned,” he was quoted as saying, adding that over the past six months the government had held several internal discussions on the issue of the cash payment.
With the committee’s formation, the prime minister hoped the issues raised by state governments in the east coast would finally be resolved in a “fair, transparent and equitable manner”.
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.
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.
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 million annually since 2005 but Putrajaya has disputed the state’s claims over the territorial waters where the joint-development projects are located.
Najib insisted today that based on the law, Kelantan was not eligible to demand the cash payments from petroleum revenue, saying that currently no petroleum production is carried out within Kelantan territorial waters.
“The federal government takes the stand that in terms of the law, Kelantan merely has the right to demand cash payment from the petroleum revenue extracted from the state’s waters, that is an area located not exceeding three nautical miles from the state’s coastline,” he was quoted as saying.
Despite this, however, the prime minister pointed out that in November 2009 he had announced in Parliament the granting of cash payments to Kelantan.
“This decision was made based on the need to continue to develop the state of Kelantan and to boost the people’s prosperity. The allocation was channelled through the Federal Development Department (JPP) Kelantan,” he said
Decades of dragging it's feet and now with the very real possibility of getting kicked out of office, Najib's trying to appease the voters... Again! A little too late!!
Please do not forget Sabah and Sarawak. While at it, what about timber royalty?