Petronas’ SST settlement in compliance with Sarawak’s laws

Datuk Sharifah Hasidah Sayeed Aman Ghazali

By Peter Sibon

KUCHING, May 9: The RM2 billion payment for the State Sale Tax (SST) for 2019 by Petronas means that the national oil company recognizes Sarawak’s Constitutional rights such as Oil and Mining Ordinance (OMO) 1958, the Malaysia Agreement 1963 (MA 63) and Inter Governmental Committee (IGC) Report, said Sarawak’s de facto Law Minister Datuk Sharifah Hasidah Sayeed Aman Ghazali.

She said prior to this, Petronas had refused to acknowledge Sarawak’s rights under the Constitution which is bound by laws.

“That Petronas has agreed to pay in full the SST due for Year 2019 and to withdraw its appeal, must be deemed to be its unequivocal acknowledgment or admission of the State’s constitutional right to impose SST on petroleum products and its acceptance of the High Court Judgment which declared the State has such constitutional authority to impose SST.

“By withdrawing the appeal, Petronas agreed to be bound by the decisions of the High Court wherein the High Court decided that Sarawak rights are protected by the Federal Constitution, the Malaysia Agreement 1963 and the recommendations under Inter Governmental Committee Report 1962.

“It must be made clear that by withdrawing their appeal, Petronas recognizes our Constitutional rights and they are bound by the laws of Sarawak and the decisions of the Court which, prior to this, Petronas refused to acknowledge our rights under the Constitution, MA 63 and IGC Report,” Sharifah Hasidah said in a statement issued here today.

She reiterated that the Gabungan Parti Sarawak (GPS) State Government remains firmly committed to defend the sovereign rights of Sarawak to the oil and gas resources.

“It has amply demonstrated this by taking Petronas to court over the SST issues. The State Government will resolve all other issues through the ongoing negotiations with the Federal Government and Petronas.

“The outcome of these negotiations will ultimately bring in more investments in the oil and gas sectors to sustain the growth of related industries, and enable the State, through Petros (Petroleum Sarawak Berhad), to enhance its involvement in the upstream and downstream areas of the petroleum industry to secure a more equitable share in the revenues from oil and gas and petroleum products produced and manufactured in Sarawak,” she said.

She asserted that the RM2 bil paid by Petronas is only SST for Year 2019 and excluded SST paid by other oil companies like Shell, Murphy Oil, Pertamina, and others operating in the State. The amount of SST to be collected in 2020 have yet to be ascertained

“Whether there would be a reduction in rate of SST in future years would depend on the outcome of the ‘commercial settlement’ to be reached with the resumption of negotiations between the State Government, Petros and Petronas.

She added that such a commercial settlement would entail greater state participation in the upstream operation (both offshore and onshore), as well as investments in downstream business and industries, so as to enable the State to have a more equitable share of the returns from oil and gas produced within the boundaries of Sarawak.

“The accord reached with Petronas is definitely not because the State Government has been advised it has a weak case and cannot take its chance in the appellate courts.

“In fact, this settlement itself was reached after Petronas failed in its application to have proceedings to enforce payment of the SST as assessed for year 2019, deferred or suspended until the disposal of its appeal, scheduled to be on 17 June, 2020,” she explained.

Sharifah Hasidah was rebutting Parti Bersatu Sarawak (PSB) president Datuk Seri Wong Soon Koh who claimed that “the anticipated oil ans gas tax for two years (2019 and 2020) totaled RM 6.775 billion” was settled for a vastly reduced sum of RM2 billion only.

“This claim is completely untrue and misleading,” she said.

Shairfah Hasidah asserted that under the terms of the settlement, Petronas will pay in full to the Sarawak Government SST due for the year 2019. This amounted to around RM2 billion excluding statutory late payment penalties and interest accruing on the amount assessed from date of Notice of Assessment till full settlement. The precise amount is still under computation.

“The SST for year 2020 remains at five per cent of the sale value of the petroleum products. Only Notices of Assessment for the Q1 2020 have been issued. There is no agreement yet for the reduction of SST for the current Year 2020,” she added. – DayakDaily