Terengganu rumblings: Battle over gravy train?

By Anil Netto,

How to try and understand what’s going on in Terengganu now?

Follow the money trail, auditors and journalists are often told.

So let’s try that here. What is Terengganu’s main asset? Black Gold. Off shore oil.

And the state’s main revenue source is the oil royalty from Petronas, which the Federal Government used to hand over to the BN state government to spend as it so desired.

That is, until the Sultan of Terengganu, our present Agong, reportedly wanted a Terengganu Investment Authority (TIA) to manage the funds.

This was the same Sultan/Agong that backed the present MB, Ahmad Said, over Abdullah Badawi’s choice of Idris Jusoh. Ahmad Said, however, was not supported by most of Umno Terengganu, who then proceeded to protest at his appointment in what appeared to be a most “derhaka” manner.

The TIA would have the MB on its board, but the fund itself was to be managed by professionals. The Sultan himself would be chairman of the board of advisers, reported The Star.

The performance of this fund would be closely monitored to ensure that the oil revenue is invested properly to ensure returns for future generations long after the oil dries up.

If the TIA goes ahead as planned, it could potentially become the new gravy train. No more projects with poor returns or wasteful projects that do not benefit the people - at least that’s the plan. (Despite receiving over RM1 billion in royalties annually, the state has one of the highest poverty rates in the country.)

The new TIA fund was supposed to seek RM10 billion from local and foreign capital markets, on the strength of the oil royalties that Terengganu receives. The federal government would provide a guarantee of RM5 billion.

In December, it was reported that the fund would be given a boost with the handing over of RM400 million in oil royalties to the state government. This was supposed to be the first part of RM3 billion in oil royalties promised by the federal government to the state government.

It was reported that the the TIA and the sovereign wealth fund, announced in December 2008, would be launched in the middle of this year.

Perhaps we should consider this backdrop - control of the the new gravy train - when looking at the latest rumblings in Terengganu.