KUALA LUMPUR, [themalaysianinsider]May 11 — Kelantan cried foul today over oil royalty payments made to Terengganu, claiming the federal government was practising double standards by denying the PAS-held state of oil royalty since 2005. State executive councillor Datuk Husam Musa said today that the RM938 million paid to Terengganu proved that Barisan Nasional (BN) was “neglecting Kelantan due to political factors.”
Terengganu Mentri Besar Datuk Seri Ahmad Said reportedly told the state assembly yesterday that the amount would be paid by June this year.
He said that RM670 million had been paid up to March this year, with RM150 million to be paid this week and another RM118 next month.
Ahmad added that the royalty was based on the five per cent provided in the 1975 agreement between state and federal governments.
“Both Kelantan and Terengganu signed the same agreement 36 years ago. The legal basis is the same,” said Husam, who also chairs Kelantan’s special committee for petroleum royalty.
Kelantan claims that Petronas owes the state RM800 million per annum for oil obtained from the Kelantan-Thailand offshore area since 2005.
Kelantan filed a suit last year in the High Court here against the national oil company for breaching the Petroleum Development Act (PDA) 1974 by failing to pay the state oil royalties.
Petronas and Putrajaya have argued that Kelantan was not entitled to oil royalties, preferring instead to offer only a token goodwill payment.
The PDA states that in return for vesting of petroleum ownership in the company, Petronas would pay cash payments to the federal and state governments where petroleum was found.
On May 9, 1975, Petronas had entered into an agreement with Kelantan where it agreed to make cash payments yearly amounting to the equivalent of five per cent of the value of petroleum obtained onshore and offshore Kelantan.
In consideration of Petronas’s payments, it was granted exclusive rights and privileges of obtaining petroleum in the state under the Kelantan Grant.
Husam today called for Prime Minister Datuk Seri Najib Razak to ensure the royalty payment issue to Kelantan is settled to ensure the rights of Kelantan citizens are returned.