Ku Li: Oil royalty ad completely off target

Former finance minister and Petronas founder Tengku Razaleigh Hamzah has questioned the federal government's wisdom in engaging in a costly information blitz to explain the Kelantan oil royalty issue through leaflets and advertisements in newspapers.

Describing the advertisement - paid out of taxpayers' money - as implying either “culpable stupidity or gross deceitfulness” by the federal government, he said it fails to point out that almost all the oil found in Malaysia is located more than 3 nautical miles offshore, but that Petronas has nonetheless been making oil payments to various states.

“By the argument deployed in the advertisement, Terengganu, Sabah and Sarawak too are not entitled to the 'cash payments' of 5 percent of profit oil (commonly and a little inaccurately referred to as 'oil royalties'). Everything is at the arbitrary behest of the federal
government,” Tengku Razaleigh wrote in his blog.

“Yet last year, according to its annual report, Petronas paid out RM6.2 billion in petroleum cash payments, with RM3 billion to Terengganu, RM2.3 billion to Sarawak and RM0.9 billion to Sabah. One wonders (on) what basis this payment was made, since none of this was for petroleum found within 3 nautical miles offshore of these states.”

An immediate implication of the argument laid out in yesterday's advertisement, he said was that Terengganu was also ineligible for the oil payments.

This means, he said after cutting off oil payments when Terengganu fell into opposition hands and replacing it with "compassionate payment", there is absolutely no basis for the government's promise to return Terengganu to cash payments again.

“All of Terengganu's oil is found very far offshore. In this matter whatever holds for Kelantan holds for Terengganu and vice versa.”

Ku Li, as he is popularly known, said the argument for depriving Kelantan of 5 percent cash payments on the basis of its petroleum resources being found beyond 3 nautical miles is “an insult to the intelligence”.

Yesterday, the federal government had placed a one-page advertisement in major Malay dailies explaining why Kelantan was only entitled to RM20 million 'goodwill' payment.

The federal government's main argument was that the oil and gas were pumped out beyond the 3 nautical mile limit of the state borders, prescribed as territorial waters under Malaysia's Emergency Ordinance (Essential Powers) No. 7 1969.

The Information, Communication and Culture Ministry was behind the publicity campaign.

Agreement 'guarantees returns'

Tengku Razaleigh, the Gua Musang MP, said he had helped draft the Petroleum Development Act, to which Kelantan, Terengganu, Pahang and Johor are signatories.

“They would benefit from the 5 percent cash payments. The Act was drafted because we knew these states did not have oil onshore or within their territorial waters.

“The device we used was a 'Vesting Deed' by which the states vested, in perpetuity, all their petroleum resources to Petronas, onshore or offshore. In return for this Petronas guaranteed the cash payment of five per cent from oil found anywhere, offshore or onshore, of the state.

“This rendered any consideration of federal or state boundaries whether at 3 or 12 nautical miles or whatever irrelevant for the purpose of reckoning the payment. States are entitled to 5 percent of profits for any oil found offshore or onshore.”

Ku Li said he had traversed the country to sign the agreement with the menteri besar of each state government.

The second prime minister Abdul Razak Hussein, he said, was driven by the nation-building concern that these poorer east coast states, which are Malay predominated, should benefit directly from offshore oil.

“I drafted the Petroleum Development Act to reflect this concern.”

Saying Umno Kelantan is making a mockery of Abdul Razak's legacy, the Kelantan prince said it is a mark of how Umno has strayed off course.

“It is this benefit to the people which Umno Kelantan opposes 34 years after Abdul Razak's death. Umno Kelantan is doing its utmost to deprive the people of Kelantan of sovereign rights secured by an Umno-led government of another day.

“No one in their right mind could mistake this as behaviour that is beneficial to Umno's long-term standing in Kelantan, let alone elsewhere as people observe this behaviour.”

Ku Li said he had spoken and written at length on the issue and have been reluctant to say more.

Moreover, as a member of the ruling coalition, he was embarrassed to have to belabour such elementary points against the government.

'10 years of misquotation'

He said the government's advertisement was also trying to exhume “10 year-old misquotations” in a government newspaper to allege that he once denied Terengganu had any right to the 5 percent cash payment.

Denying that he had made any such remark, Ku Li questioned if the government media is to be believed and why the government relies on misquotation.

Tengku Razaleigh said that, as a a BN backbencher at the time, he had opposed the federal government's intervention to prevent Petronas from making oil payments to Terengganu and the move to channel those funds instead into wang ihsan (compassionate fund).

He and former Lord President and Terengganu executive councillor Salleh Abas (right) had offered themselves as witnesses to the Terengganu government in the suit it filed against the federal government to recover those oil payments.

He said between 2000 and 2009, a total of RM15.8 billion was paid out through the legal black hole of wang ihsan, but not to the rightful party as specified under the Petroleum Development Act, which is the state government's consolidated fund.

“The outcome of that spending is the Monsoon Cup, a crystalmMosque in which it is impossible to pray, a leaking swimming pool, a collapsed bridge and a collapsed stadium. The people of Terengganu remain poor while billions of ringgit have been paid out in their name.”

He denied of putting the interests of the state before those of Umno.

The issue goes far beyond Kelantan, he said, as the arguments in the newspaper advertisement seek to undercut the rights of all the states in respect of a natural resource, which is within the state's sovereign right.

“It violates a contract between Petronas and the states, denies the Petroleum Development Act, denies the raison d'etre of Petronas (which was formed to ensure the integrity of the federation by way of an equitable sharing of this valuable resource).

“It also sets the federal government in contravention of an Act of Parliament.”

He concluded by saying this is not a question of politics or personality, or about what he said or anyone else said or about Umno or PAS.

Tengku Razaleigh stressed that it is about the government complying with written agreements governed by an Act of Parliament and respecting parliamentary democracy.

“The rights of the people are not to be fulfilled or withheld depending on who they have voted for. In treating Terengganu and Kelantan in this manner we are depriving them of money that is rightfully theirs, undermining sovereign state rights, and eroding parliamentary democracy.”

“We should do the right thing by the people at whose pleasure we serve.”

news courtesy of Malaysiakini