20% oil royalty to Sabah can do wonder

The question on whether Sabah should receive more than 5% sharing on the oil royalty was brought up in Parliament recently. Pakatan Rakyat has proposed an increase to 20%.

A reply from the Prime Minister Department saying that the payment on the production of petroleum from the Central government to the state government is based on the Production Sharing Contract (PSC) which is signed between the Petronas and the parties in PSC like Shell, Exxonmobil and others. In order to adjust the sharing percentage, it must be referred back to the Petronas and the PSC concerned.

Even though the percentage of sharing with the states concerned is 5% only, but the Federal government is allocating some big development fund to the states. This is much higher than the actual oil royalty receivable by the state.

For 9th and 10th Malaysia plan, Sabah is receiving the highest development allocation. In the 9th Plan, there was RM20.31 billion for Sabah. The 1st Rolling Plan in the 10th Malaysia Plan, Sabah received RM10.7 billion, and RM7.3 billion on the 2nd Rolling Plan.

The federal allocation under the 9th and 10th Malaysia Plan is not like what it looks. In the real fact, it worked out to be only a mere RM4 billion per year under the 9th Plan and many development projects were not completed until the 10th Plan. This development allocation is not as great as what it sounds and when compared to the taxes that the federal government had collected from Sabah plus the huge sum of oil and gas revenue (95% of total production), Sabah should be given at least many times the amount on the allocation to catch up with its far behind development. We are actually 15 years behind the other states in terms of economy, industries, agriculture, education, health, and development.

Therefore, it is only right for the Sabahan to demand for a 20% on the oil royalty. Sabah is receiving an estimated RM 1 billion from the 5% oil royalty as stated in the State Budget 2013, while Pakatan Rakyat has promised a 20% sharing when it comes into power, and that is RM 4 billion. This amount is enough to rebuild our stagnant and slake economy in Sabah. In order to achieve what the BN cannot do, the only way is to support PR to be the next government.

Dr Hiew King Cheu MP for Kota Kinabalu