State Sales Tax settlement: ‘Criticism against state govt unwarranted’

Vehicle getting refueled at a petrol station. — DayakDaily.com file pic. // Photo: Pixabay

By Peter Sibon

KUCHING, May 12: Since it was first reported that the state government and Petronas had reached a settlement over the five per cent State Sales Tax (SST) the national oil company owed the state, much criticism has been hurled at the Sarawak government for various reasons.

Firstly, it was claimed the Sarawak government has been shortchanged by Petronas by accepting RM2 billion for the five per cent SST owed for 2019 instead of RM2.6 billion.

According to a source familiar with the matter, the RM2 billion mentioned in the recent joint press statement issued by Sarawak’s de facto Law Minister Datuk Sharifah Hasidah Sayeed Aman Ghazali and Petronas chairman Datuk Ahmad Nizam Salleh, was not the final amount due to Sarawak.

“The actual amount may come up to RM2.5 billion which will include the RM2 billion plus possible accrued interest and penalties which has been agreed by the High Court earlier on,” the source told DayakDaily today.


The source also confirmed that other oil companies operating in Sarawak such as Petromina, Shell and Murphy Oil have paid their dues amounting to about RM1.3 billion.

“So, to say that Sarawak is being shortchanged by Petronas is not true at all. The figure should still be around RM2.5 billion from Petronas as has been mentioned by Chief Minister Datuk Patinggi Abang Johari Tun Openg in his Budget speech last year.

“The details of the final figures are now being worked out,” added the source.

The source reiterated that what was even more crucial was that the state’s laws such as the Oil Mining Ordinance (OMO) 1958, Malaysia Agreement 1963 (MA63), and the SST Ordinance were recognized as valid laws in the country, as well as what was laid out in the Inter-Governmental Committee (IGC) Report.

“Our settlement outside the court was to save cost for both parties as Petronas has concurred with the decision of the High Court that Sarawak has the right to impose the five per cent SST,” the source reiterated.

Secondly, the Sarawak government was also criticised for allegedly giving in to Petronas on oil and gas matters as outlined in the Petroleum Development Act 1974 (PDA74).

To this allegation, it should be noted that the settlement reached between the Sarawak government and Petronas recently was only on SST alone and has nothing to do with PDA74.

“In no uncertain terms are we compromising our rights over oil and gas resources in Sarawak. In fact, we are only strengthening our position with the establishment of Petros (state-controlled Petroleum Sarawak Berhad),” added the source. — DayakDaily