Tabling of the
Distribution of Gas Bill 2016
Minister of Public
Utilities(Datuk Sri Dr Stephen Rundi Anak Utom:
Tuan Speaker, I beg to move a Bill intituled an Ordinance
to regulates the distribution of gas in Sarawak be read a second time. Tuan
Speaker, petroleum and natural gas are important resources of the State.
They are found on shore and off shore within the
boundaries of the State of Sarawak as defined by the Sarawak (Alteration of
Boundaries) Order, 1954.
Historically oil mining in Sarawak started in the early
part of the last century and the Rajah made, what was generally known as the
“Shell Concession Order” in 1921 to declare and reserve certain areas in Miri, for
the exploration and mining of petroleum by Sarawak Oil Fields Limited.
In 1958, this august House passed the Oil Mining
Ordinance to regulate oil mining in Sarawak and in the continental shelf. This Ordinance remains in
force today.
Tuan Speaker, when Malaysia was formed, the State retains
legislative powers to issue mining leases and certificates under Item 2(c) List
II [State List] in the Ninth Schedule of the Federal Constitution.
The powers of the Federal Government over development
of natural resources, oils and oil fields under Item 8(j) of List I (Federal
list) was expressly stated in the Constitution to be subject to Item 2 (c) List
II. This means the development of oil and oil fields in or within Sarawak
territory must be subject to exploration licences and Mining Leases or
certificates issued under the Oil Mining Ordinance of Sarawak.
In accordance,
with the recommendations of the Inter-Governmental Committee Report (IGC), the
Yang Di-pertuan Agong made the Borneo States (Legislative Powers) Order 1963
under Article 95C of the Federal Constitution, to enlarge the legislative
authorities of Sarawak (and Sabah) to include powers to make laws relating to
Electricity and Distribution of Gas.
In 1969,
however, following the Proclamation of Emergency in the aftermath of the May 13
unrests, the Federal Continental Shelf Act, 1966 and the Petroleum Mining Act,
1966 were extended to Sarawak vide the Emergency Ordinance No. 10 of 1969.
These two Acts
affected the State’s rights to regulate the exploration and mining of petroleum
and gas in offshore areas, notably, in the continental shelf which is within
the boundaries of Sarawak.
Exploration licences and mining agreements for
petroleum in offshore areas, have to be approved under the Petroleum Mining
Act, 1966 by the “Petroleum Authority” who is the Yang Di-pertuan Agong.
However, with
the annulment of the Proclamation of Emergency in 2011, by reason of Article
150 (7) of the Federal Constitution, the said Emergency ordinance no.10 lapsed
and the Petroleum Mining Act, 1066 and Continental Shelf Act, 1966 ceased to
have effect in Sarawak.
Consequently,
the State’s oil Mining Ordinance, which was never repealed when Emergency Ordinance
No.10 was proclaimed, and the State’s rights legislate on Distribution of Gas
are no longer affected by the said Acts particularly as the State Government
does not agree to the extension of the Federal Gas Supply Act, 1993 to Sarawak.
Tuan Speaker, the passing of this Bill which is now
before this august House, will be an exercise of the powers which
constitutionally belong to the State, to legislate on the Distribution of Gas
in Sarawak as a significant step in the ongoing Devolution of Powers process to
“reclaim” powers which was under the Federal Constitution and in accordance
with the recommendations of the IGC, are vested with the State of Sarawak.
Tuan Speaker, the primary objective of the Bill is to
regulate the distribution of Gas in Sarawak. It is an important step towards
the greater control by the State over the utilisation of an important resource,
namely natural gas, produced, albeit offshore but in the continental shelf of
the State and therefore, within the State’s boundaries and from “State land” as
defined in the Land Code.
The various clauses in the Bill have been explained in
the Explanatory Statement to the Bill. When passed, all activities associated
with the distribution of gas or within the distribution system for supply and
delivery of gas described in clause 7 will be licensed by the State through the
Director for Gas Distribution.
These activities include the import to liquefied
natural gas into Sarawak, degasification, treatment, separation and processing
of gas, transport, supply and retail of gas; the construction, management and
maintenance of gas pipelines, terminals, plants and facilities.
The distribution of all types of gas will be covered.
These include natural gas, liquefied natural gas (LNG), liquefied petroleum gas
(LPG), specialty gases used by our hitech industries and hospitals.
The Sarawak Gas Supply Services (Operating Company)
Ordinance, 1995 will be repealed but action taken or things done under the said
Ordinance, including the vesting of assets and properties of Sarawak Gas
Distribution Sendirian Berhad or SGD shall subsist or would not be affected by
the repeal of that law.
SGD or Sarawak Gas Distribution Sendirian Berhad,
currently supplying piped gas to over 22,000 domestic, commercial and
industries consumers in Miri, will continue to service these consumers under
current tariff rates and in accordance with agreements or arrangements entered
between SGD and these consumers.
SGD or Sarawak
Gas Distribution Sendirian Berhad, will continue to play an important role in
the distribution of gas in Sarawak. With the repeal of the said Ordinance,
Petronas, as a producer and supplier of gas for distribution in Sarawak, will
be subject to the new law.
Thus, in
undertaking the activities stipulated in Clause 7 of the Bill, Petronas need to
be licensed under this new law. Petronas will have to discuss with the State
Government in having those prescribed activities regulated under our State law.
Tuan Speaker, for the information of this august
House, in exercising this power to legislate on Distribution of Gas does not
mean that the State Government is overlooking the fact that there is a
Petroleum Agreement signed on 27 March, 1975 between the State Government and
Petronas whereby in return for “ownership rights and privileges of petroleum”
been vested in Petronas, an annual cash payment of 5% of the value of the
petroleum won and saved from areas in Sarawak shall be paid to Sarawak.
This Agreement and the payment of the “royalty” relate
to upstream resources and activities which must still be regulated under the
Sarawak Oil Mining Ordinance and other law relating to petroleum in Sarawak.
The State Government had not under the Petroleum
Agreement granted exclusive rights to Petronas to carry out downstream
activities, such as the distribution of gas, including those which are part of
the gas distribution system in the state. For the payment of royalty under
agreement does not cover rights to downstream activities in Sarawak.
For these reasons, the State maintains that Section 6
of the Petroleum Development Act, 1974 which purports to protect the
exclusive rights of Petronas to undertake downstream, activities associated
with the Distribution of Gas in Sarawak, cannot and should not be used to
exclude other parties, particularly Sarawakians, from carrying on the business
of distribution of gas in Sarawak unless with the written permission of the
Prime Minister.
Tuan Speaker, The State Government recognises the role
Petronas as the national oil Corporation in the development of the oil and gas
industry in Malaysia and its contributions to the national economy.
The State Government however in safeguarding the economic
interest of this State wants to ensure that important resources like natural
gas area available to boost the industrial development of the State, and such
gas is provided to important economic sectors like power generation and
industries in Sarawak.
The State Government also wants to see the growth of the
gas industry in Sarawak, with more Sarawak companies involved.
All these efforts would not jeopardise Petronas’
operations and business in the State but the State Government wants Petronas to
be mindful of the aspirations and needs of Sarawakians and that it should
operate in an environment where Petronas like all other parties involved in the
gas supply industry, are subject to State laws.
Tuan Speaker,
the new law will come into force as soon as the regulatory structure for gas
distribution in Sarawak is in place and the Director of Gas Distribution be
appointed.
With this new law, more Sarawakians and Sarawak companies
would have the opportunities to participate in the various business activities
associated with the system of gas distribution in Sarawak. This would be a
significant tangible result arising from the on-going process of Devolution of
Power.
Tuan Speaker, for information of this august House that
on the 4th April, 2016 the following agreements were signed with Petronas for
the additional supply of gas to Sarawak for the power and industrial sectors,
namely:
(a) A Principal
Agreement between the State and Petronas for the supply of 450 million standard
cubic feet per day (mmscfd) of natural gas for the power and non-power sectors
in the state;
(b) A Memorandum of Understanding (MoU) to conduct a
joint study for the Sarawak Petrochemical Master Plan;
(c) A new 20 year Gas Sales Agreement (GSA) between SESCO
and Petronas for the supply of 100 mmscfd of natural gas for the proposed new
Kidurong Combined Cycle Power Plant;
After this Bill is passed, the State Government will
continue to discuss with Petronas for additional supply of gas to Sarawak for
distribution in the State and to boost its industrial development programmes.
I therefore, call upon all Members of this august House
to support this Bill. I bag to move. -
Nov 21, 2016
Winding the debate
on the Bill
Minister of Public Utilities (Datuk Sri Dr Stephen Rundi
Anak Utom): Ahli Yang Berhormat for Tanjung Batu, from Tasik Biru, Ahli Yang
Berhormat for Samalaju, Balingian, Jemoreng, Piasau, Sadong Jaya, for record,
Meradong, Batu Kitang, Telang Usan, Muara Tuang, Balai Ringin, Krian, Kabong,
Pelagus, Pending, Repok, Pujut, Engkilili, Dudong, Ngemah, Lambir, Batu
Lintang, Kota Sentosa and last but not least Tupong.
Ahli-Ahli Yang Berhormat telah pun menunjukkan bukan saja
minat, concern and all has expressed their need to safeguard the economic
interest of this State by having control over the important natural resources
like natural gas which is essential to accelerate the industrial development of
the State.
But however, the debate on Petronas here is not relevant
to this Bill. This Bill has nothing to do with the supply of natural gas. Our
gas negotiation with Petronas is a separate matter. It is not limited to 450
million scarf as mentioned by some of Ahli Yang Berhormat but we will continue
to negotiate it with Petronas.
For the information of Ahli Yang Berhormat, my Ministry
has already has plans after passing of this Bill to promote gas related
industry in the State and to improve gas reticulation and distribution system to
provide pipe gas for all commercial industrial and also the domestic consumers.
That is in our plan.
On the issues of tariff, my Ministry is mindful of the
fact that gas is an essential item for both industrial and domestic usages. In
fixing the tariff, my Ministry will always take into account the interest of
the consumers and the effect of tariff on the cost of living of the people.
With regards to the power and functions of the director
of as in the structure of our gas distribution, there will be a unit, properly
staff set up to enable director to exercise all his subsidiary function.
The regulator is not a single individual but he will be
supported by adequate supporting staff and the mechanism to do his job. So it
is not an individual decision. With regards to the issue of having more gas for
distribution and supply in Sarawak, the State Government will continue to
negotiate to secure additional supply of gas which is produced in off-shore
areas within the boundary of Sarawak.
As I have explained, amendment would be made to the Oil
Mining Ordinance 1958 to ensure that this effort would be successful beside
with the passing of this Bill, the State Government would be better place in
procuring additional amount of gas to meet the needs of the State and for the
benefit of our people.
The agreement with the Petronas is because Petronas is
the producer of the gas so we, to supply the gas to the State, we will have to
talk to Petronas.
On the issue industrial safety is of course concern of
everyone in the august House when this new Law is enforce, this would be dealt
by Regulation be made under Clause 32 of the Bill and also all those involved
in gas distribution industry were also have to be, to abide by all other
relevant Laws relating to occupational health, safety and environment.
The import of gas license can be issued by the State. For
instance export licence can be issued by STIDC similarly is also to the
distribution of gas which the unit is to be set up.
So I would like to thank all the Ahli-Ahli Yang Berhormat
for your concern. I know all of us are very concern about the beloved State of
Sarawak.
So therefore we must also be able to walks the talks and
also be able to, the things that we said must be do able. So I would like to
thank Ahli-Ahli Yang Berhormat for many constructive views and suggestion which
to be taken into consideration in the implementation of this Law.
Tuan Speaker: Honourable Minister, are you taking?
Y.B. Encik Chong Chieng Jen: Honourable Minister aspiring
to be the CM so he is willing to take questions from the opposition. Honourable
Minister, there are some of my questions you did not answer, you know, by how
much is the tariff going to be reduced? Any policy proposed? And when is it
going to be introduced?
Menteri Kemudahan Awam (Y.B. Dato Sri Dr Stephen Rundi
Anak Utom): Yang Berhormat for Kota Sentosa, don’t be so sarcastic. So,
sometimes we have to be more diplomatic. You are talking about the tariff? Yes,
in one way or another, they will enjoy our tariff. We will look into it when
the time comes and the implementations in full stage, okay. Please be patient.
Tuan Speaker: Ahli-Ahli Yang Berhormat, the question
before the Dewan is that the Motion standing in the Order Paper in the name of
The Honourable Minister for Public Utilities be referred to the Committee of
the Whole House.
Tuan Speaker: As many as are of the opinion say “Yes”.
Government: Yes ... (Resounding “Yes”)
Tuan Speaker: As many as are of the contrary opinion say
“No”. Opposition: No ... (Murmuring “No”)
Tuan Speaker: The “Yes” have it. The Motion is agreed.
The Dewan shall now resolve into the Committee of the Whole House to consider
the Bill which stands committed to the Committee.
COMMITTEE OF THE WHOLE HOUSE
Tuan Pengerusi: The Dewan shall now consider the
Distribution of Gas Bill, 2016. Clauses 1 to 32 Tuan Pengerusi: The question is
that Clauses 1 until 32 be ordered to stand part of the Bill. As many as are
the opinion say “Yes”. Government: Yes…
Tuan Pengerusi: As many as are of the contrary opinion
say “No”. The “Yes” have it. Clauses 1 until 32 are ordered to stand part of
the Bill. Enacting Clauses and Title Tuan Pengerusi: The Dewan Shall now
resume.
Minister of Public Utilities:(Datuk Sri Dr Stephen Rundi anak Utom): I wish to
report the Distribution of Gas Bill, 2016 has been considered by the Committee
of the Whole House and agreed to without amendment.
Tuan Speaker, I
beg to move that the Distribution of Gas Bill, 2016 now read a third time and
do pass.
Tuan Speaker: Ahli-Ahli Yang Berhormat, the question
before the Dewan is that the Distribution of Gas Bill, 2016 be read a third
time and do pass. As many as are the opinion say “Yes”. Government: Yes … Tuan
Speaker: As many as are of the contrary opinion say “No”. The “Yes” have it.
The Bill is read a third time and passed.
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