Oil royalty explanation is insult to intelligence, says Ku Li

By Adib Zalkapli

KUALA LUMPUR, Feb 22 — Petronas founder Tengku Razaleigh Hamzah today rubbished attempts by the federal government to explain, through newspaper advertisements, its refusal to pay the Kelantan government oil royalty.

“The advertisement fails to point out that almost all the oil found in Malaysia is located more than three nautical miles offshore, and Petronas has nevertheless been making oil payments to the states,” said the Gua Musang MP in a statement today.

The Information, Communication and Culture Ministry yesterday took out full-page advertisements, in Malay weeklies, consisting of a list of eight questions and answers to rebut Tengku Razaleigh’s argument that Kelantan, as well as other states, are entitled to the five per cent oil royalty under the Petroleum Development Act 1974.

In late January, Tengku Razaleigh (picture) had spoken in support of Kelantan’s demand at a rally in Kota Baru. Apart from the advertisement, leaflets discrediting the Kelantanese have also been distributed in the state to counter his arguments.

The federal government’s main argument is that oil and gas are extracted from waters that are beyond the three-nautical mile limit prescribed as territorial waters under Malaysia’s Emergency Ordinance (Essential Powers) No 7 1969.

“By the argument deployed in the advertisement, Terengganu, Sabah and Sarawak too are not entitled to the ‘cash payments’ of 5 per cent of profit from oil,” said Tengku Razaleigh.

“The argument for depriving Kelantan of 5 per cent cash payments on the basis of its petroleum resources being found beyond 3 nautical miles is an insult to the intelligence,” he added.

The Gua Musang Umno chief said that the implication of the argument is that Terengganu has no right to receive the cash payment which was reinstated early last year.

The royalty was revoked in 2000 after PAS won control of the Terengganu state government a year earlier.

“All of Terengganu’s oil is found very far offshore. In this matter whatever holds for Kelantan holds for Terengganu and vice versa,” said Tengku Razaleigh.

He also claimed that he had never supported the federal government in revoking the Terengganu oil royalty a decade ago.

“In fact, as a BN backbencher at the time I opposed the federal government’s intervention to prevent Petronas from making oil payments to Terengganu and the move to channel those funds instead into ‘wang ihsan’,” said Tengku Razaleigh.

“Tun Salleh Abbas and I offered ourselves as witnesses to the Terengganu state government in the suit it filed against the federal government to recover those oil payments,” he added, referring to the former Lord President.

Tengku Razaleigh said the Petroleum Development Act was designed to protect the interest of the poor states as was the intention of former Prime Minister Tun Razak Hussein.

“I traversed the country to sign this agreement with each chief minister of each state government. Tun Razak was driven by the nation-building concern that these poorer east coast areas, which are also predominantly Malay areas, should benefit directly from offshore oil, and I drafted the Petroleum Development Act to reflect that concern,” said Tengku Razaleigh.

“It is this benefit to the people which Umno Kelantan opposes 34 years after the death of Tun Razak,” he added.

He urged the federal government to set political differences aside and let payment be made to the Kelantan government.

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