Oil royalty: Putrajaya’s “creative accounting” may be at Sarawak’s expense

Lina Soo

KUCHING, July 20: Tun Dr Mahathir Mohamad’s announcement yesterday that all oil-producing states will be paid 20 per cent of the profit from their resource may be bad news for Sarawak. This is because the amount may be less that the five per cent oil royalty that the state currently receives.

State Reform Party Sarawak (STAR) president Lina Soo said Dr Mahathir seemed to have deviated from Pakatan Harapan’s election pledge to give 20 per cent oil royalty — where the amount is based on the value of the resource extracted, not the profit.

She wondered whether the prime minister was merely trying to divert attention away from the real issue — ownership of the oil and gas resources found in Sarawak.

Hence, Soo urged the Sarawak government to address this issue through the State Legislative Assembly.

Failing to do so would mean state lawmakers had failed in their duty to fight and protect Sarawak rights, resources and sovereignty, she argued.


“I understand that the convention to calculate oil royalty is based upon the percentage of gross production and is also free and clear of all costs. However, I’m stunned to learn that the prime minister’s offer of ‘20 per cent of profit’, which would factor in production costs, operational expenditure and taxes.

“Has the prime minister moved the goalpost so as to be seen fulfilling its election promise, yet denying Sarawak voters the real value of 20 per cent royalty by changing the benchmark from gross production to profit?” Soo asked in a statement.

She questioned whether Putrajaya was using creative accounting as 20 per cent of the profit might be less than five per cent of the gross production.

During the Dewan Rakyat sitting yesterday, Dr Mahathir assured Rantau Panjang MP Zailah Mohd Yusoff and Kapit MP Datuk Alexander Nanta Linggi that the government would fulfil its promise to pay 20 per cent royalty to oil producing states in the East Coast of Peninsula Malaysia as well as Sabah and Sarawak.

The premier stressed that all oil-producing states were entitled to oil royalties, as the Pakatan Harapan government had no intention of siphoning money from the royalties to strengthen any political party.

However, Dr Mahathir later clarified his earlier statement by saying that the 20 per cent payment would be based on the profit. — DayakDaily