Sarawak’s settlement with Petronas was out of desperation

By Chew Lip Song

SARAWAK entered into a lop-sided deal with Petronas because of the state’s dire financial health which has taken a beating following the Covid-19 outbreak, an opposition leader said.

Michael Kong, the special assistant to state DAP chairman Chong Chieng Jen said while he welcomed Petronas paying Sarawak RM2 billion, the government had backtracked by recognising the national oil company’s powers to regulate the oil and gas industry in the country.

“The settlement is driven predominantly by desperation to increase the state’s coffers which are immensely affected by the Covid-19 pandemic,” Kong said in a statement.

He added that the Prime Minister had said that both the state government and Petronas had mutually accepted Petronas’ role under the Petroleum Development Act 1974 following the dispute settlement announced on Friday.

This, Kong said, went against the Gabungan Parti Sarawak’s stance on the issue.

“Over the past year, leaders within the GPS coalition have been going around claiming that Sarawak has full rights to all its oil and gas. We also saw the emergence of overnight constitutional experts where many suddenly became very learned on the subject matter.

“I recall vividly how many came forward and slammed Dr Shad Saleem Faruqi, a renowned Constitutional Law expert when he said that all oil and gas, regardless whether found over land or under the seabed, is in the hands of the Federal Government,” Kong said.

With the settlement, he said Sarawak should revisit its budget and not over-commit with extravagant projects of lower priority and dubious merits.

He said this was even acknowledged by the former Second Finance Minister Datuk Seri Wong Soon Koh recently.

“With the settlement, Sarawak will be receiving RM2 billion from Petronas. Many people are facing economic hardships due to the current pandemic and we hope that this money can be put to good use for the general public instead of grand projects like the ART public transport,” Kong added.

On Friday, Petronas and the state government jointly announced that the former has agreed to pay RM2 billion in sales tax owed to the Sarawak government following a settlement agreement between both parties.

Petronas has also agreed to drop its appeal against the High Court’s decision ordering it to pay the tax. In return, Sarawak will reduce the sales tax, based on a rate and timeline to be agreed upon by both parties.

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