Asia Malaysia Sabah politician urges Dr M to also review “unfair” oil royalty aside...

Sabah politician urges Dr M to also review “unfair” oil royalty aside from water issue with Singapore

Jamawi Jaafar, an assemblyman from Kemabong, is asking Dr Mahathir to re-consider the oil royalty agreement made in 1976 between Petronas and the government of Sabah




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Kota Kinabalu—With Malaysian Prime Minister Dr Tun Mahathir Mohamad pressing for an increase in what he considers to be an unfair water price that Singapore pays for water from Malaysia, another Malaysian official is speaking out about a similar situation—this time with regards to the oil royalty agreement with the government of Sabah.

According to Jamawi, the 1976 Petroleum Agreement between Petronas and the government of Sabah is not aligned anymore with the state’s present needs.

The Assemblyman further said that Dr Mahathir has given voice to the dissatisfaction of Malaysia’s government with the current water agreement with Singapore.

The 1962 Water Agreement between Singapore and Malaysia allows for the Republic to get 250 million gallons (946.3 million liters) of water every day from the Johor River at a price of 3 sen for every 1,000 gallons. This agreement is in effect until 2061.

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Free Malaysia Today reports Mr Jamawi as saying, “In his recent comments, he said the rate is ridiculous as it has not changed since 1962 and should be reviewed.”

He said in a statement on Wednesday, March 6, that Singapore was exploiting the water from Malaysia.
At present, he is also asking for Dr Mahathir to consider the sentiments and expectations of the people of Sabah concerning the oil agreement.

“The 5 percent value is ludicrous in this day and age. The state government, through Chief Minister Shafie Apdal, has asked for an increase of the oil royalty to 20 percent for Sabah.”

According to the Assemblyman, the claim of the state government of 20 percent is just, because it is responsible for developing infrastructure for the people of the state.

He added, “We hope the federal government will take these demands seriously and return all our rights under the Malaysia Agreement 1963 (MA63) so that Sabahans can finally enjoy their own state resources.”

In September 2018, Sabah Chief Minister Datuk Seri Shafie Apdal said publicly that he would hold the Pakatan Harapan (PH) government to their pledge of a 20 percent oil royalty. This would mean that Sabah would earn between RM 6 to 7 billion, which is around S$ 2 billion.

This is sorely needed for developing the state, which lags behind peninsular Malaysia in certain ways, such as education, healthcare, infrastructure.

Mr Shafie told the press back then that he talked to Dr Mahathir concerning the oil royalty, who replied that the federal government needed time to examine the specifics, as “it is not so easy.”

However, Mr Shafie said, “But, if you give the 20 percent oil royalty, you will make three to four million Sabahans and Sarawakians happy.”

The Malaysian Prime Minister has assured that the government is ready to make adjustments to the current 5 percent royalty paid to oil-producing states, but the change should be carried out without “killing” Petronas.

Sabah’s Chief Minister said, “What is RM 6 billion -7 billion (oil royalty) when Najib can build RM 55 billion ECRL in Kuala Lumpur. We are building a nation here.” He said this in reference to the East Coast Rail Line (ECRL) project under former Prime Minister Najib Razak, which had cost RM 81 billion.

Dr Mahathir had made an announcement on Malaysia Day last year that the government would bring back Sabah and Sarawak’s status as equal partners in the federation.

For Mr Shafie, this is both historic and unprecedented. “This is something we have been looking forward to. Now, we have to go into the detailed part of it and look at the particular area for devolution of powers.”

On his part, Dr Mahathir had expressed concern over adding to Petronas’ operating expenses, which will happen as oil royalties increase. “We do not want to kill Petronas. If you take 40 percent of its operating cost and add that to the operation cost, Petronas will lose money.

We need to maintain the strength of Petronas but at the same time we feel that there is a need to relook at the 5 percent which is part of the operation cost which is very big.”

Read related: Dr Mahathir: In the World Court, Singapore would lose on water issue


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