SABAH Chief Minister Musa Aman is right. After 36 years, it is positively time to review the oil revenue-or profit-sharing agreement in between Sabah, Sarawak, the sovereign supervision as well as Petronas, the inhabitant oil company. And it is well-suited since Najib Razak, the Prime Minister, is reviewing income payments, deemed as royalties, from inorganic substance income to oil-producing peninsular Malaysian states of Kelantan, Pahang as well as Terengganu.
Sabah, like the others, has been receiving 5% oil royalty. And this has been the source of melancholy of Sabahans who feel shortchanged. But it would be nave to consider which augmenting it will placate Sabahans pang from the clarity of detriment of what is theirs. They do not see oil as well as gas as the inhabitant asset notwithstanding carrying been Malaysians for almost 50 years.
Sabah in fact has never been shortchanged by Kuala Lumpur of the oil as well as gas. It receives about four times some-more than the 5% oil kingship from the sovereign supervision for the amicable as well as infrastructure growth under any succeeding five-year Malaysia plan. The state problem has been in spending the income fast enough.
Sabah expects about 800m ($ 258m) ringgit in inorganic substance royalties this year. Federal grants have been estimated at about 350m ringgit. The state has got somewhat some-more than 10 billion ringgit to carry out 424 projects under the initial phase of the roll! ing devi se of the 10th Malaysia devise which started final year.
The Borneo island state contributes the small some-more than the entertain of Malaysia's crude oil prolongation of about 635,000 barrels the day. The bulk of it comes largely off the peninsular coast of Trengganu. Sarawak's makes up the rest. Petronas final year paid 5.4 billion ringgit in "petroleum proceeds" to the sovereign as well as state governments. (Petronas has never referred to these income payments as "royalties" in the financial statements.)
Najib speaks of the "fair" placement of income payments from inorganic substance revenue. And this is what the Petroleum Development Act of 1974 has set out to grasp after Petronas sealed the initial prolongation pity contracts with Shell, Exxon as well as alternative unfamiliar oil companies in 1976. Under the formidable mechanism, Petronas sets in reserve 10% of sum income from oil as well as gas prolongation for income payments to the sovereign supervision as well as oil-producing states. Out of this money, the sovereign takes half as well as the states keep the balance.
The usually sore indicate is which the sovereign supervision is the solitary shareholder of Petronas. It gets the prosaic annual division of twenty-eight billion ringgit. Last year it got thirty billion ringgit out of the profit of 63 billion ringgit.
It would thus be pertinent afterwards for Najib as well as Petronas to consider converting Sabah's as well as alternative oil-producing states' share of oil as well as gas income into equity. This would positively help to diminish Sabahans' clarity of detriment of their healthy resources. Surely, they will be proud to own the square of Malaysia's usually Fortune 500 association which will worsen their clarity of belonging to the 13-state federation where they have been separated from the peninsula by the South China Sea.
Rather than "cash ! payments " or "royalties", Sabah as well as the alternative oil-producing states would be receiving dividends as prolonged as Petronas continues to be profitable. Whether dividends will pay some-more is the indecisive indicate even yet Petronas is trying to smash into behind some-more profit into the operations as well as limit dividends to 30% opposite 61% now.
So is the subject of either it would reduce sovereign appropriation of the country's amicable as well as infrastructure growth should remuneration of oil as well as gas dividends to the sovereign supervision fall. Sooner or after Kuala Lumpur will have to cut the dependence on oil as well as gas income which right away accounts for 45% of the inhabitant budget.
Giving Sabahans as well as Sarawakians the stake in Petronas will surely help their integration in Malaysia. After almost 50 years, it is still not too late to start. (Insight Sabah)
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Courtesy of Bonology.com Politically Incorrect Buzz & Buzz
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