15pct oil royalty won't bankrupt Petronas

The Sabah Progressive Party (SAPP) has questioned BN's Kota Belud MP Abdul Rahman Dahlan's reasoning that Petronas will go bankrupt should the government heed its demand for 15 percent in oil royalties.

SAPP's supreme council member, Peter Marajin, said that if Petronas cannot manage its operations, after this increase in oil royalty to Sabah, then Abdul Rahman should advise the national oil company to possibly close shop.

"It would be prudent for Petronas to give back its operation to the Sabah state government. The state government would then decide either to manage its oil industry by itself or award it to competent oil companies like Shell or others.

"After all, after 36 years, Sabahans have not benefited much from their very own oil and gas resources. In fact, Sabah has turned into the poorest state in the country," he said in a statement.

Marajin, who is also a lawyer, said it was absurd for Petronas to only complain now about its operating costs and non-profitability after 36 years in operation.

It is akin to like a father having dinner with his children, saying: "This fish taste awful, discouraging them from even touching it, yet eating it all by himself".

He emphasised that oil is a state owned natural resource and if it was not profitable, why then did the federal government saw it fit "to snatch" this important source of revenue from Sabah in the first place.

Dahlan (left), Marajin (right)

Marajin was commenting on Abdul Rahman's (right) statement in the Borneo Post yesterday where the federal lawmaker, was quoted as saying that the 15 percent oil royalty "may lead to Petronas bankruptcy".

Abdul Rahman, said that based on the current formula, for every RM100 in revenue derived from Sabah's oil, five percent goes to the state's coffers and five percent to the federal government.

"Approximately 45 percent goes into recovery cost, and the remaining 45 percent goes to the joint venture's gross profit. In the end, it is as clear as the dawn that Petronas' profit, after splitting revenue with others and after paying taxes, is only around 16.74 per cent."

"If Petronas is asked to pay up the 15 per cent from its profit margin, this would effectively render them unable to pay their overheads, financial commitments and re-investment for future income. The end result would be a financial blow which may lead to bankruptcy," the BN MP said.

Petronas not transparent 

However Marajin claimed that Petronas has never been transparent in its operations and financial accounts from 1976 till today.

"Why is Petronas so secretive? Since this natural resource belongs to the rakyat of Sabah, the people have every right to know its operations and financial position. Petronas' money is the Sabahans' money.

"Hence, the Petronas' account must be subject to public scrutiny."

He said the only small piece of information that the public has about Petronas' operation is that Sabah produces about one million barrels of crude oil per day, out of which five percent goes to Sabah and another five per cent goes to the federal government.

"After deducting operating costs, the net profit of the remaining 90 percent of the barrels goes to the federal government being the sole shareholder and beneficiary of Petronas.

Marajin said a rough calculation based on the above information showed that Sabah gets 50,000 barrels a day, being the five percent which equals roughly to RM13.7 million a day.

"A year is RM4.97 billion. Now, how much net profit does the federal government get out of the remaining 90 percent or 900,000 barrels a day is anyone's guess.

"Hence, if the federal government cannot manage Petronas, give back the operations to the Sabah state government," he reiterated.