Don't accept Federal government's proposal, See tells Sarawak government

By Simon Peter

KUCHING, June 3, 2014: The State government must not agree to payment for oil and gas royalties in the form of an increase in Federal development grants for Sarawak.

Picture: See Chee How, flanked by PKR National Wanita vice head Voon Shiak Ni (left) and PKR Petra Jaya branch chief Baharuddin Mokhsen, at the press conference.

"Development grants and royalties are two separate issues," Sarawak PKR vice chairman See Chee How told reporters today.

"The royalties are our entitlement as of rights, but the development grants are basically hands-out from the Federal government, as were and are practices of the Barisan government," he said.

See called on the Federal government to fix the date for discussions on the oil and gas royalties due to the petroleum states of Sarawak, Sabah, Kelantan and Trengganu.

"The discussions should centre on the 20 % royalties," he told reporters.

"The mechanism of paying the 20 % royalties must be transparent and accountable.

"In principle, we will not agree to the payment of oil and gas royalties in the form of increased development grants as suggested by Prime Minister Najib Razak yesterday," he said, pointing out that the State and Federal governments must be clear with the distinction of the royalties and development grants.

He added:"If the Sarawak government is to agree with the Federal government's suggestion to make the payment of royalties in the form of increased development grants, then the State Legislative Assembly must be shown audited accounts of such payments and be ensured that the additional payments in lieu of the royalties are over and above the present development grants that are allocated to Sarawak."

He said that this is to ensure that the Federal Government will not make use of the development grants to gross over the rightful entitlement of Sarawak in the form royalties.

Najib, addressing the national level Gawai Dayak celebration in Miri yesterday, had said that the Federal government was willing to consider the request by the Sarawak state government for higher gas and oil royalties.

He gave this assurance in response to a request by Chief Minister Adenan Satem for an increase in royalties and for more funds from the federal government for the development of the state.

The State Assembly sitting last month approved a special motion to seek an increase in royalties from  5% to 20%.

“The federal government will give utmost consideration on this matter (request for higher oil and gas royalties),” Najib told the audience, adding that Federal government negotiate with the state government over its interests.

 Najib also affirmed the federal government’s support and assistance to speed up development in the state.

The prime minister said the federal government’s consideration was not only on the request for higher oil and gas royalties but also more funds through other means for the State.

Meanwhile, See, who is also the Batu Lintang State Assemblyman, urged the State government to demand for shares of equity and direct participation in the Production Sharing Contracts involving the exploitation and production of oil and gas and related products in Sarawak.

He understood that the State government only has shares of 5% equity in Petronas Carigali Sdn Bhd in downstream and supporting activities, but not in the PSCs.

"It is in these PCSs that we should have shares, and I believe Petronas have signed many PSCs with many international oil companies to explore oil and gas in areas off Sarawak's coast," he said.

"Therefore, we call on the State government to demand for such equity holdings, through State-owned sovereign wealth fund (SWF), when the PSCs are up for negotiation for extension of their usual 15 or 20 years terms," he added.

"We must ask for the State's share of ownership, through SWF, in the downstream industries such as contracts for infrastructural facilities and all forms of maintenance support," he said.