KUALA LUMPUR: Senator Datuk Chin Su Phin has asked Prime Minister Datuk Seri Najib Tun Razak as to whether the Federal Government would consider raising the oil royalty to 20 per cent for Sabah during the question-and-answer session at the Dewan Negara recently.
In response, Minister in the Prime Minister’s Department Senator Dato’ Sri Abdul Wahid Omar said the Federal Government’s allocation to Sabah was more than the 20 per cent of oil royalty would provide.
He said the exploration activities and production of oil and gas were carried out based on the Production Sharing Contract (PSC) signed between Petronas and its partners such as Shell and Exxonmobil, adding that the oil royalty was one of the terms under the PSC.
Abdul Wahid said the payment of oil royalty to the producing states and Federal Government was based on the Petroleum Development Act 1974 and Royalty Agreement.
As per the Royalty Agreement, both the oil producing states and the Federal Government get five per cent oil royalty each.
Based on the PSC, the revenue obtained from oil and gas production will be divided between Petronas and oil operators such as Shell and Exxonmobil, after deducting production and operational costs, petroleum tax and royalty payments to the producing states and Federal Government.
On the other hand, Abdul Wahid said the Federal Government had allocated RM11.2 billion to Sabah in 2012 for expenditure, developments and grants.
He said the allocation to Sabah was 2.6 times higher than the RM4.3 billion of taxes collected by the Federal Government from the State.
“This allocation is also higher than the demand to increase oil royalty to 20 per cent, which is estimated at RM3.8 billion.
“This reflects the Federal Government’s concern to improve the wellbeing of the people and developments of Sabah.”
Abdul Wahid further said that the Federal Government had allocated RM16.5 billion in the first four years of the 10th Malaysia Plan (2011-2014), which was 8.7 per cent of the total amount allocated under the 10MP.
“This allocation was the highest compared to other states, excluding the federal territory.”
In addition, he said the Federal Government had approved RM3.3 billion to fund development projects in Sabah this year.
Among the projects approved in Sabah under Budget 2014 include RM404,209,525 for rural electricity supply (total cost RM2,511,139,052); RM113,750,000 for rural water supply (total cost RM1,183,675,773.610, RM60,850,000 for housing aid programmes (total cost RM 976,480,553), RM 140,000,000 for Kota Kinabalu International Airport expansion and RM100,000,000 (total cost RM 930,370,705.24) and RM100,000,000 for the Palm Oil Industrial Cluster (POIC) in Lahad Datu (total cost RM896 million).