By DayakDaily Team
KUCHING, Nov 17: The federal government has conceded that the Sarawak Legislative Assembly (DUS) has the authority to enact laws regulating gas distribution in the State.
State legal advisor Dato Sri JC Fong told the court that senior federal counsel (SFC) Ahmad Hanir Hambaly @ Arwi agreed there was no dispute over Sarawak’s legislative power on the matter.
He said the Vesting Order is the Borneo States (Legislative Powers) Order, 1963, which extended the legislative powers of the State legislature to include electricity and the distribution of gas.
According to Fong, the Order also vests executive authority over gas distribution in the State, giving Sarawak the power to license gas supply businesses and appoint a gas aggregator.
With the federal counsel’s concession, Fong argued that the Distribution of Gas Ordinance (DGO) and its 2023 amendments are constitutional and valid.
As such, PETRONAS must comply with the DGO, he said, adding that under Article 24.2 of the Sarawak Gas Sales Agreement (SGSA), PETRONAS cannot supply gas to PETROS without a licence issued under Sections 7 and 8 of the DGO.
Fong further explained that under Clause 1.1 of the Joint Declaration signed by Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg on May 21, 2025, both the DGO and the federal Petroleum Development Act (PDA) must co-exist in regulating the gas supply chain.
He said the PDA covers offshore gas production, while the DGO governs onshore distribution through the State-appointed gas aggregator.
He rejected senior counsel Datuk Cyrus Das’ argument that Sarawak’s enactment of the DGO was intended to frustrate the SGSA.
Citing the case in Sabah of the Court of Appeal ruling in MLGH Sdn Bhd v Rainbow Bay Sdn Bhd, Fong said the government and the legislature are separate entities, and the legislature may pass any law within its constitutional limits.
Even if under the SGSA, he said, PETRONAS can supply gas in Sarawak without a license issued under the DGO, those provisions would have been frustrated or rendered illegal by operation of the DGO as amended in 2023.
Without a licence, he said, PETRONAS cannot supply gas to PETROS or recover payments for such supply, making performance of the SGSA unlawful and void.
Fong argued that the DGO is not inconsistent with Sections 6(1) and 6(3) of the PDA. He said Section 6(3) had already fulfilled its statutory purpose by requiring any person, including PETRONAS, to apply for the Prime Minister’s permission within six months of its commencement on November 1, 1975.
He added that Section 6(1) cannot apply to laws enacted more than six months after that date, such as the federal Gas Supply Act 1993 and the DGO 2016.
Therefore, Fong said, PETRONAS must comply with the DGO, which is a validly enacted State law and does not itself grant any right to distribute gas in Sarawak.
As the DGO was enacted after Section 6(3) came into force, it cannot be inconsistent with that provision of the PDA.
Fong will continue his submissions tomorrow (Nov 18). — DayakDaily
