Petronas to pay Sarawak RM2bil

A file photo of Samarang Offshore Complex oil and gas platform, Labuan. — Photo credit: Sangu Nelus

By Adrian Lim

KUCHING, May 8: Petronas today announced that it will pay Sarawak Government RM2 billion in State Sales Tax (SST) for 2019.

In a joint press statement issued by the Assistant Minister of Law, State-Federal Relations Datuk Sharifah Hasidah Sayeed Aman Ghazali and Petronas Chairman Datuk Ahmad Nizam Salleh, both the Sarawak Government and Petronas have reached an amicable settlement of five per cent SST on petroleum products in Sarawak.

“Both parties have agreed that the best approach to achieving a common solution is through commercial solutions by creating a more stable business and investment environment.

“Following the withdrawal of all legal proceedings, Petronas through its subsidiaries, will make full payment of the SST imposed by the Sarawak Government on petroleum products for 2019 amounting to RM2 billion at five per cent of SST on the sales of the oil and gas products, ” the statement said today.

Both parties agreed that such arrangement will be a sustainable approach to enable the country’s oil and gas industry to survive, especially in the current volatile oil and gas markets.

Sarawak government and Petronas have also agreed that taxation for petroleum products under the SST (Taxable Goods and Rate of Tax (Amendment) (No.2) (Order 2018) be subjected to fluctuation based on decisions made during future negotiations.

The Sarawak government has also agreed that the SST will be limited to petroleum products under Order 2018.

However, all agreements and correspondence which have been agreed between the Sarawak government and Petronas under the Petroleum Development Act 1974 (Act 144) remain in force.

Meanwhile, it is agreed that Petronas will continue to be recognised as the country’s O&G company which has full control in regulating the whole development of the O&G industry in accordance with the Federal Constitution.

Both parties have also come to the consensus that Petronas together with the Sarawak government will continue to develop the O&G industry in Sarawak.

At the same time, Petronas said it will continue to have dialogues with the State government to ensure that Sarawak has an active participation and investment opportunities in the O&G industry based on commercial terms, including collaboration with companies operating in Sarawak.

Works Minister Datuk Seri Fadillah Yusof and Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz will be responsible to chair a joint committee to ensure successful implementation of the commercial partnership between the Sarawak government and Petronas. — DayakDaily