Salahuddin (left) accused Najib of lying over the oil royalty issue. — file pic
KUALA LUMPUR, Nov 4 — The Barisan Nasional federal government will pay Kelantan “goodwill payment” for oil extracted in its waters but PAS lawmakers are disputing it, saying it is akin to receiving alms instead of rightful oil royalty.
Prime Minister Datuk Seri Najib Abdul Razak told Parliament that Kelantan has no right to claim for royalties from national oil company Petronas since oil was extracted beyond the state’s waters, similar to the situation in Terengganu
“We have decided to give goodwill payment to Kelantan. This decision is made considering the need to develop Kelantan in line with the federal development programme,” he told the Dewan Rakyat, adding that the state will be receiving the allocation beginning next year.
But Najib’s statement immediately sparked an uproar, with Kubang Kerian MP Salahuddin Ayub saying the Kelantanese are not expecting goodwill payment but what is rightfully theirs.
“So all this while, Terengganu have been receiving goodwill payment and not royalties? Under Section 144 of the National Petroleum Act, Terengganu is receiving royalty and not courtesy payment, so how is this possible?” blasted Salahuddin.
“We are not beggars. We are demanding for what is ours,” the PAS vice-president said.
Najib, visibly annoyed by Salahuddin’s attack gave a smirk and merely replied, “You’re trying to politicise the issue. Tak habis-habis dengan politik (never-ending politics).”
However, the prime minister’s statement contradicts the Statistics Department’s State/District Data Bank which lists Kelantan as one of the four oil and gas producing states. The other three are Sabah, Sarawak and Terengganu.
The federal government has argued that oil and gas extraction activities are located about 150km off Kelantan’s shores and is jointly developed with Thailand, and thus beyond the legal limit of state/national boundaries. Also, the territory is being disputed by Thailand and Malaysia.
At a press conference later, Salahuddin said Najib was deliberately trying to mislead the House with his reply that Kelantan does not have rights to claim for oil royalty.
“Under the Act, it is clearly stated that oil producing states must receive 50 per cent of the revenues and it was clear that Najib lied when he said that Terengganu is receiving goodwill payment and not royalties,” he said.
He added that he will refer the prime minister to the privileges committee for misleading the House.
Meanwhile, Najib told reporters later that the goodwill payment will benefit the Kelantan government.
He also promised that talks about the payment, with the amount dependent on oil production and calculated according to the mechanism used in other oil producing states, will be done with transparency.
Kelantan, ruled by PAS since 1990, began seeking the oil royalty recently although the Cakerawala gas field began production in January 2005.
The entire 7,250-sq-km area in the Gulf of Thailand, in the oil-rich South China Sea, is called the Malaysia-Thailand Joint Development Area (JDA).
The JDA was created as an interim measure to exploit the natural resources in the seabed or continental shelf claimed by the two countries, with the proceeds shared equally.
The arrangement does not extinguish the legal right to claims by both countries over the area. This is one of the first applications of the joint development principle in territorial disputes in the world.
The two countries signed a memorandum of understanding on February 21, 1979 in Chiang Mai for joint development and later on May 30, 1990 in Kuala Lumpur to constitute the joint development authority.
As of the end of 2007, approximately 8.5 trillion standard cubic feet of gas reserves (proved and probable) from twenty two fields in the area have been discovered.
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