KOTA KINABALU: Sabah wants an active role in gaining more revenue from the development of its oil and gas industry, not just passively receiving a bigger royalty from Petronas, said Chief Minister Datuk Seri Musa Aman in his latest remark on the oil royalty issue.
Musa said while the State always wanted the existing five per cent royalty to be reviewed and increased, there are better and more practical ways to ensure that Sabah and its people can benefit more from the natural resources extracted from its waters.
“The opposition has been harping on it and using the issue to confuse the people. They make accusations as if they are the only one championing Sabah’s rights when it comes to oil royalty.
“The fact is, we (BN State Government) have always discussed with the national leadership, about how important it is to increase the royalty given to us but there are many ways for us to increase the profit we could gain from the industry. Increasing the royalty is just one of them, and not necessarily the best option,” he said when officiating at the Sabah Education Retirees Association’s biennial general meeting here yesterday.
He said this when responding to several issues highlighted by the association’s head, Datuk Khamis Noyo in his welcoming remarks.
Musa stressed that the government recognized the issue of oil royalty has always been very close to the heart of the people of Sabah and both the State and the Federal understand and appreciate their wish and aspiration in regards to the matter.
However, he said the people should understand that what matters the most is not just whether the State Government is getting 5% or 20% royalty but how much revenue overall the State and the people could gain from the oil and gas Sabah produces.
While pushing for bigger royalty may seem to be the most direct, forward and easiest way to increase the State’s shares, it is in reality unpractical and not conducive for the long-term and healthy development of the oil and gas industry.
On top of paying 5% royalty to the State and another 5% to the federal government, Petronas also has to bear the high cost of finding and extracting the oil and gas, which could cost up to billions of ringgit.
The remaining 90 per cent of the value of the oil extracted is mostly used to finance the operational cost and whatever left has to be shared with the companies partnering Petronas in its operation.
“Instead of asking for more royalty, it is better and more profitable for us to have equities in companies involved in the industry. We always think about the best approach, that is why for example we decided to pipe our gas to Bintulu because building another LNG terminal in Sabah is not economically viable as we already have one just next door, which also happens to be the second biggest in the world.
“Instead of having another similar facility competing with Bintulu, why not we send the gas there and benefit from the existing operation through equity shares,” he said, adding that Sabah has been given 10 per cent equity in return for its contribution to Bintulu LNG operation.
He added the State is also working closely with Petronas and the federal government to have more equity in the more lucrative downstream activities of the oil and gas industry.
“So, the claim that we are being sidelined is not true at all. The truth is that we are gaining even more than we have asked for, thanks to the close ties and continuous discussions and collaboration with the federal government, and the Prime Minister’s unwavering commitment towards ensuring the best for Sabah,” he quipped.
Meanwhile, speaking to reporters after the function, Musa said the government always recognized and appreciated the important role played by teachers in educating and moulding the younger generation into a knowledgeable and productive society.
The progress enjoyed by the country today would have not been achieved if not for the hard work and dedication of teachers, he added.
“We in the State Government will always support and work with the education community towards developing Sabah. I wish to express my sincere gratitude towards our teachers for their contribution and also urge the association to work towards increasing the number of its members and strengthening its role in helping to develop the State,” he said.