On the second day of the second meeting of the second session of the 13th Parliament on June 10, 2014, Political Studies for Change (KPRU), the only parliamentary think tank in Malaysia was holding a KPRU Parliamentary Policy Briefing session to discuss on a special motion approved by the Sarawak state assembly in May this year. The motion requested the Federal Government to increase the state oil and gas royalties (hereafter referred to as oil royalty) from 5% to 20%.
There were two aspects which had prompted the think tank to pay heed to the Sarawak state assembly’s motion, as the motion has got a deep and far reaching effect on the other states. One aspect is on how to redress the growing tendency of federalism ever since the formation of Malaysia, the other aspect is how the national tax revenue is being utilised.
On June 8, Adenam Satem, the Sarawak chief Minister who was sworn in to the office for exactly 100 days, had submitted the state assembly’s request to Prime Minister Najib Razak. The request to increase the oil royalty by 15% is not a simple mathematical question.
On May 22, State Reform Party (Star) Sabah Chapter Chairman Jeffrey Kitingan told the Borneo Post that based on the international price level of US$103.19 per barrel, it was estimated that Sarawak would be able to receive oil royalty up to RM10 billion and Sabah was estimated to get RM5 billion.
Two years ago, the Finance Ministry in its reply to member of Parliament (MP) for Machang Saifuddin Nasution in the Dewan Rakyat, revealed that from 2008 to 2012, Sarawak, Sabah and Terengganu state governments had received RM10.413 billion, RM4.093 billion and RM11.623 billion respectively on oil royalties.
In other words, the three states comprising of Sarawak, Sabah and Terengganu had received a total of RM6 billion on oil royalties in 2012, and had received a total of about RM26 billion oil royalties within five years from 2005 to 2012.
In the book “Rich Malaysia, Poor Malaysians: Essays on Energy, Economy and Education”, the author Anas Alam Faizli said that the Terengganu state government had received RM7.13 billion in oil royalty from 1978 to 2000. However, in 1999 when PAS took over the Terengganu state government, the Federal Government had stopped paying the Terengganu state government oil royalty from 2000.
According to the estimation made by PAS vice president Husam Musa, if the Federal Government treated Kelantan fairly, it had owed Kelantan state of an average of RM1.7 billion per year in oil royalty.
The Kelantan state government had filed a suit against Petronas and the Federal Government in High Court on August 30, 2010 for breach of contract and also claiming for the oil royalty.
After the 13th General Election, the number of MPs in Sarawak, Sabah, Terengganu and Kelantan stood at 31, 25, 8 and 14 respectively. The four oil producing states have got an aggregate of 78 MPs, constituted 35% of the total number of 222 MPs.
Any motion or bill that requires simple majority to pass through in the Dewan Rakyat will be made possible if all the 78 MPs and another 34 MPs give their support. But for a two-third majority motion or bill to pass through, apart from the 78 MPs, it needs to have another 70 MPs to support.
DAP has got five MPs in Sabah and two in Sarawak, KEADILAN has got one MP each in Sarawak and Sabah. PAS has Nine MPs in Kelantan and four in Terengganu. In other words, the number of the Pakatan Rakyat (PAKATAN) MPs in these four oil producing states stands at 22.
PAKATAN’s MPs remained at a total of 88 after the Teluk Intan by-election. If we take off the 22 MPs in the four oil producing states, there are 66 MPs with PAKATAN, enough to support any motion or bill that needs only the simple majority to pass through.
In other words, it is possible to amend the Petroleum Development Act 1974 to increase the state oil royalty if all the MPs from the Barisan Nasional (BN) and PAKATAN in the four states supported the motion for amendment.
In fact, it does not have to wait until the next general election, the government of the four oil producing states can request the Federal Government to include the new term on oil royalty in the 2015 Budget allocation. If the Federal Government fails to do so, the MPs in the four oil producing states can ask for secret ballot and the 2015 Budget will not be able to pass through in the parliament. If this thing happened, what would be the next course of action is not beyond expectation.