Wednesday, March 10, 2010

Rahman Yakub silent on why Terengganu gets oil royalty

Despite arguing that Kelantan was not entitled to oil royalty claims, Tun Abdul Rahman Yakub, the Sarawak Chief Minister when the Petroleum Development Act (PDA) came into force in 1974, was unable to say yesterday why neighbouring Terengganu was receiving from the federal government oil royalty payments.

He had said yesterday that the legal position governing the oil royalty claims of Sabah and Sarawak was different from that of the states in peninsular Malaysia.

He differentiated Sarawak’s position from that of Kelantan — which is now planning to sue the federal government for oil royalty — by arguing that the east Malaysian state could rely on a colonial-era declaration that its territorial waters extended beyond the three nautical mile limit.

But he was silent when asked by The Malaysian Insider about why the federal government had been paying Terengganu oil royalties while refusing to do so for Kelantan.

Petronas had been paying Terengganu the 5 per cent oil royalty since offshore production began in 1978 but stopped after PAS captured the state in the 1999 general elections.

It promised to resume twice-yearly direct payments from March 2009 after the earlier payments were converted to compassionate payments disbursed by federal agencies.

Oil was first discovered in the South China Sea off Terengganu in 1973, a year before Prime Minister Tun Abdul Razak Hussein directed Tengku Razaleigh to form Petronas and become its founding chairman.

He told The Malaysian Insider that he believed Kelantan could not claim oil found offshore, unlike Sarawak and Sabah.

“If there is no declaration that offshore is part of state territorial waters then you cannot claim,” he said. But when he was asked about Tengku Razaleigh’s contention that Kelantan should be entitled to oil royalties because Terengganu was receiving the annual payments, Abdul Rahman said he could not comment on other states.

“It is up to those states to sort it out with the federal government,” he said.

Abdul Rahman was also silent about the provisions of the PDA which makes no differentiation between Sabah, Sarawak and the states in the peninsular. Section 2 of the PDA vested the ownership and exclusive rights of exploring and obtaining oil to the federal government so long as state governments signed “Vesting Deeds.”

The vesting deeds were all signed by the various mentris besar and chief ministers, including Abdul Rahman, to give exclusive rights to the federal government in return for five per cent oil royalty payments if oil is found.

Abdul Rahman is now arguing, however, that the legal position of the states in peninsular Malaysia was different from that of Sabah and Sarawak. Abdul Rahman said that Sarawak was entitled to oil royalties because Queen Elizabeth had declared in 1954 that the east Malaysian state’s territorial waters extended beyond the three-nautical-mile limit.

The British monarch’s declaration was used by his Sarawak administration to negotiate payments for the state, said Abdul Rahman.

The PDA and other subsequent legal provisions does not however reflect his assertion that the two east Malaysian states were being treated differently.

courtesy of Malaysian Insider

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