20% oil royalty, another of Warisan’s unkept promises

KOTA KINABALU - The Sabah Progressive Party (SAPP) has accused Warisan of flip-flopping on its election promises, including on the Kaiduan dam, the Sabah identity cards (IC) issue and the 20% oil royalty.

SAPP president Yong Teck Lee noted that while launching the party’s manifesto on April 27, Warisan president Shafie Apdal had pledged to demand an increase in oil royalty due to Sabah, from 5% to 20%, if it won the state in the May 9 polls.


“Warisan described the present royalty rate as an injustice to both Sabah and Sarawak, saying the Bornean states had been deprived of what was rightfully theirs under the Malaysia Agreement 1963.

“What has become of that election promise on the 20% oil royalty increase?

“My question is in view of what federal Economic Affairs Minister Mohamed Azmin Ali revealed on Saturday after a two-hour discussion with Shafie, that ‘Petronas might have to close down because it cannot afford to pay the 20% oil royalty based on net profits’.”

Yong said Sabahans would now have to wait six months for a committee to submit its report to a federal Cabinet committee which, in turn, would submit it to the federal Cabinet.

The people would also have to wait for feedback from Kelantan, Terengganu and Sarawak.

“We will now see how we must comply with the Petroleum Development Act 1974, which started the exploitation of our oil resources in the first place.

“Perhaps it is easier said than done. That is why Prime Minister Dr Mahathir Mohamad agreed on a 20% profit, because 20% straight-up royalty is not economically feasible.”

He accused Warisan of playing to the public gallery, as promising to give and being able to deliver were two different things.

For a long time, he said, the issue of oil royalty had been a sore point for Sabah, where growth in the oil and gas sector was vital to social and economic development.

He said it was not enough to simply promise a 20% increase in oil royalty, calling this lip service to create a temporary feel-good factor.

“I would like to know how and when Warisan will fulfil its promise on the 20% oil royalty increase for Sabah and its people,” he said, adding that there was no need to establish a committee on the matter.

“A phone calculator will tell you that 20% is four times 5%. The mechanism and formula to count the 5% or 20% pursuant to the Petroleum Development Act 1974 are already in place and have been in use for 40 years.

“A 20% royalty means four times whatever Petronas has been paying Sabah based on production volume and market prices. Even a kindergarten kid could count that.”