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Kelantan tells Putrajaya to fulfil 2018 pledge on oil royalty

It reminds Putrajaya of the decision by the previous Pakatan Harapan government under the leadership of Dr Mahathir Mohamad.

2 minute read
A Petronas oil rig stands off the coast of East Malaysia. Photo: AFP
A Petronas oil rig stands off the coast of East Malaysia. Photo: AFP

The Kelantan government has expressed regret at the government's refusal to channel oil royalties to the state, saying it goes against a decision by Putrajaya under the previous Pakatan Harapan government led by Dr Mahathir Mohamad to make such payments to all states including those under opposition rule.

This followed statements by Economy Minister Rafizi Ramli and law minister Azalina Othman Said that Kelantan and Terengganu were not eligible for payments from Petronas as the oil extracted was from outside the range of three nautical miles belonging to the states under the Regional Sea Act 2012.

But Kelantan Menteri Besar Ahmad Yakob said the state assembly had rejected this reasoning in 2015 as it felt that the federal government was trying to stop states from being paid oil royalties by limiting their territories.

"In Clause 1(1) of the agreement between the Kelantan government and Petronas on May 9, 1975, it is clearly stated that Petronas should pay cash to the state government in an annual payment equal to the amount of 5% of the value of the petroleum found and obtained in Kelantan," said Ahmad.

He also cited the minutes of a meeting by the National Finance Council in June 2018, stating that the "goodwill payment" would be abolished and cash payments for petroleum given to Kelantan and Terengganu "without taking into account the status of the states which are controlled by the opposition".

Ahmad said the state government had participated in a series of negotiations with prime ministers from 2013 to 2021, adding that the discussions were joined by the Petronas chairman and senior officers.

"As such, the state government urges the federal government to settle the petroleum payments directly to the state government for the benefit of the people," he added.

Last week, PAS MP Ahmad Marzuk Shaary urged Prime Minister Anwar Ibrahim to uphold the Kelantan sultan's decree for the fulfilment of petroleum payments to the state according to the agreements signed. 

"The joint-development area, a petroleum mining area that overlaps with Thailand, is only 145km from the Bachok beach.

"But the government decided in 1996, when Anwar was finance minister, to move the landing to Songkhla, which is 230km away. 

"If you want to raise the dignity of the Malays, where are the Malays in Songkhla? If you want to help the hardcore poor, it should have been done in Bachok," he said during his debate on the Supply Bill 2023 in the Dewan Rakyat.