The Malaysian Insider

By Asrul Hadi Abdullah Sani

KUALA LUMPUR, Nov 6 — PAS president Datuk Seri Abdul Hadi Awang today accused Datuk Seri Najib Razak of punishing the people of Kelantan for not voting Barisan Nasional (BN) in the last general election by withholding payment of oil royalty due to the state.

“We assume that what is done to Kelantan is an act of political revenge when the people legally elected PAS through a democratic process,” he said in a press statement today.

The Prime Minister sparked an uproar on Wednesday when he announced that the BN federal government will pay Kelantan “goodwill payment” for oil extracted in its waters instead of oil royalty.

PAS lawmakers are disputing the “goodwill payment”, saying that it is akin to receiving alms instead of rightful oil royalty.

Najib told Parliament that Kelantan has no right to claim for royalties from national oil company Petronas since oil was extracted beyond the state’s waters, similar to the situation in Terengganu.

However, Hadi argued that Terengganu has actually been receiving oil royalties and not “goodwill payments” but the oil royalties were cancelled after PAS won the state in 1999.

Hadi revealed that there are written documents in official parliamentary records which state that Terengganu had received oil and gas royalties.

"In the official statement of Parliament on Oct 19, 1993 Deputy Minister in the Prime Minister’s Department (Datuk Wong See Wah) stated that since August 1975 until February 1993, Petronas has paid royalties amounting to RM3.71 million to Terengganu, RM1.49 billion to Sabah and RM2.79 billion to Sarawak,” he said.

Hadi stressed that Najib’s statement also seemed to deny the existence of the petroleum agreement between the states with Petronas. According to the agreement, the state governments had been paid oil royalties since 1978 to March 2000.

“The fact is that royalty revenue has been recorded in the official statement of Parliament through the minister's official response, the Prime Minister's speech before this and it is also written in the budget that the state government receives royalties, including Terengganu,” he said.

Hadi added that Najib’s statement had insulted previous prime ministers by implying that the former prime ministers were wrong in giving oil royalty.

Hadi challenged the federal government to refer this matter to Tun Salleh Abas, who was involved directly in drafting the Petroleum Act 1974 as the Solicitor-General together with former Finance Minister Tengku Razaleigh Hamzah.

He also urged the courts to re-open the Terengganu state government’s lawsuit.

The Terengganu government, when it was under PAS, filed a lawsuit against the federal government for cancelling the royalty but this case is now in the process of being dropped as Terengganu is now under BN control.

Kelantan, ruled by PAS since 1990, began seeking the oil royalty recently although the Cakerawala gas field began production in January 2005.

The entire 7,250 sq-km area in the Gulf of Thailand, in the oil-rich South China Sea, is called the Malaysia-Thailand Joint Development Area (JDA).

The JDA was created as an interim measure to exploit the natural resources on the seabed or continental shelf claimed by the two countries, with the proceeds shared equally.

The arrangement does not extinguish the legal right to claims by both countries over the area. This is one of the first applications of the joint development principle in territorial disputes in the world.

The two countries signed a memorandum of understanding on Feb 21, 1979 in Chiang Mai for joint development and later on May 30, 1990 in Kuala Lumpur to constitute the joint development authority.

As of the end of 2007, approximately 8.5 trillion standard cubic feet of gas reserves (proved and probable) from 22 fields in the area have been discovered.

The oil royalty issue was first brought up by PAS’s Datuk Husam Musa in 2001. This year, the issue was raised by PAS MPs in Parliament again, as Kelantan was found listed in the Statistics Department's State/District Data Bank as one of the four oil- and gas-producing states.

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