Dr Sim’s promise of 100 per cent oil royalty shows ignorance, says Chong

Chong speaks to reporters, flanked by Pending assemblywoman Violet Yong (left) and PH-DAP candidate for Bandar Kuching Dr Kelvin Yii.

KUCHING, May 2: The argument over Sarawak’s oil royalty continues with Democratic Action Party (DAP) candidate for Stampin Chong Chieng Jen calling his opponent full of “hot air” and ignorant of the oil and gas industry.

Chong was referring to Sarawak United Peoples’ Party (SUPP) Stampin candidate Datuk Dr Sim Kui Hian’s recent statement published in local dailies that Sarawak will get 100 per cent oil royalty if they are stronger, as compared to Pakatan Harapan’s (PH) pledge of 20 per cent oil royalty once they become government.

“Either he is totally ignorant or totally insincere. To say that we want more while you cannot deliver the basic demand that we had made — 20 per cent oil royalty — Sim Kui Hian is (spouting) hot air, learning it from his master, i.e. Abang Jo (Chief Minister Datuk Patinggi Abang Johari Tun Openg),” Chong told a press conference today.

The State Legislative Assembly (DUN) had in 2014 passed an unanimous resolution to get 20 per cent oil royalty, which according to Chong, should be fulfilled first.

“If you can’t even deliver what was unanimously resolved in DUN, i.e 20 per cent of oil royalty, what is there to talk about 100 per cent?”

Moreover, Chong, who is also the state PH chairman, said it is impossible to get 100 per cent based on how the oil and gas industry operates.

He explained that royalty is compensation in lieu of rights, where the state government sells its rights to the federal government through Petronas in the Petroleum Development Act 1974, and the compensation is 5 per cent royalty on gross crude oil price.

He said 60 per cent goes to the contractor who explores and extracts oil, and the federal government also get 5 per cent royalty, and the remaining 30 per cent goes to the Petronas for the cost of operation, research and development and future development and the remaining 5 to 10 per cent is the profit.

“So basically, the state government get 5 per cent of gross, federal government get 5 per cent and a few more percentage points on the profit, and a few more percentage points on the petroleum tax. So all added up, the federal government will get 10-15 per cent, that’s about it.”

He said the suggested 20 per cent oil royalty from PH is the maximum to get from the crude oil of Sarawak and whoever suggested 100 per cent shows total ignorance, adding that he is shocked and disappointed over Dr Sim’s ignorance of the industry after being a minister for two years. — DayakDaily