Ku Li sticks to his guns

(The Star) - Tengku Razaleigh Hamzah is sticking to his guns on the oil royalty issue, despite severe criticism from his Umno colleagues.

The former Petronas chairman maintained that Kelantan should receive cash payments for oil extracted off its shoreline, regardless of the distance of the oil well from the coast.

Tengku Razaleigh, a former finance minister, was writing in his blog in response to full-page advertisements in Malay dailies by the Federal Government, explaining that Kelantan was not entitled to royalties as the oil and gas were extracted more than three nautical miles from the state’s shoreline.

“Yet last year, according to its annual report, Petronas paid out RM6.2bil in petroleum cash payments, with RM3bil going to Terengganu, RM2.3bil to Sarawak and RM0.9bil to Sabah.

“One wonders what basis this payment was made on, since none of this was for petroleum found within three nautical miles offshore of these states,” Tengku Razaleigh said.

He said the Petroleum Development Act was drafted on the instructions of former prime minister Tun Abdul Razak to ensure that Kelantan, Terengganu and potentially, Pahang and Johor, benefited from the 5% royalty, although these states did not have oil onshore or within their territorial waters.

“The device that we used was a Vesting Deed, by which the states vested, in perpetuity, all their petroleum resources to Petronas, onshore and offshore. In return for this, Petronas guaranteed the cash payment of 5% from oil found anywhere, offshore or onshore, of the state.

“This rendered any consideration of federal/state boundaries, whether at three or 12 nautical miles or whatever, irrelevant for the purpose of reckoning the payment,” he said.

Information Communication and Culture Minister Datuk Seri Dr Rais Yatim was reported as saying that Tengku Razaleigh’s stand now was contradictory to his statement in October 2000.

“There was an agreement, and if the oil well is in the state, then they can ask for the royalty. But the well is not in its (Kelantan’s) borders,” said Dr Rais.

On Thursday, Prime Minister and Umno president Datuk Seri Najib Tun Razak said the party would decide if action should be taken against Tengku Razaleigh after getting feedbacks from Umno members.

Earlier this month, Tengku Razaleigh remarked that state governments were entitled to a 5% royalty for petroleum extracted off their waters, which was in contrast to the Federal Government’s stand that states such as Kelantan qualified only for wang ehsan (goodwill payment) and not royalty.

An aide to the Gua Musang MP said Tengku Razaleigh was not perturbed by the possibility of the party taking disciplinary action against him.