‘Our Oil, Our Future’ new battle-cry in Borneo

It is all about real reforms and making a difference for the better for the two poorest states in Malaysia.

For starters, Putrajaya will go broke paying out the massive arrears being demanded, and that’s assuming it accepts the proposed new oil royalty of 70 percent. Also, much of the oil billions virtually plundered from Sabah and Sarawak over nearly four decades has either been squandered away by prolific spending habits in Putrajaya, politics or disappeared into private pockets mostly in Peninsular Malaysia.

Joe Fernandez, Free Malaysia Today

Oil and gas, among others, have become the mother of all political hot potatoes in Sabah and Sarawak, especially among the more nationalist-minded young, and especially following huge recent discoveries of the two commodities in local waters and in their sizeable portion of the adjacent Spratly Islands.

The result has been that the one-sided oil agreement evidently signed under extreme duress in 1976 between the federal government/Petronas and the Sabah and Sarawak state governments has come under increasing public scrutiny.

The two states at present get only five percent royalty for oil and gas produced in the inner waters where the number of wells is comparatively fewer and increasingly drying, if not dried out, and none for the outer waters.

The opposition alliance, Pakatan Rakyat, has publicly pledged that it will increase the oil royalty to 20 percent when, not if, it seizes the reins of power in Putrajaya during elections expected between May this year and next May. The five-year term of the present Parliament ends in April/May next year.

Pakatan has so far not clarified whether the 20 percent pledge covers the outer waters.

It’s unlikely that the Peninsular Malaysia-based national opposition coalition will agree to fork out royalty for the outer waters. This means the Pakatan pledge is as good as meaningless, more hype than substance, favouring form over real reforms.

Local hero Jeffrey Kitingan meanwhile is demanding a blanket 50 percent oil royalty.

Jeffrey’s State Reform Party (STAR), a Borneo-based national party, has already put together an oil and gas master plan.

Maximum benefits

The Jeffrey Kitingan Master Plan aims to wrest maximum benefits from energy resources for the two states through upstream and downstream diversification and backward and forward integration of hydrocarbon and other energy resources.

Likewise, the opposition Sabah Progressive Party (SAPP) is also counting its chickens before they are hatched.

The party claims it has plans to develop the local oil and gas sector in Sabah but this hinges, according to insiders, on the state collecting the 20 percent royalty pledged by Pakatan. The party does not know whether the revised royalty from Pakatan covers the outer waters. So much for wishful thinking and living on the hope that “some nice things will happen one day”, as articulated by Jeffrey in one of his books.

Some in the younger generation in the two states favour taking a leaf from the oil-producing provinces in neighbouring Indonesia. Here, Jakarta takes only 30 percent.

Others point at the Muslim republics in the Russian Federation which get to keep all the proceeds from their oil and gas resources.

The most radical position on the oil and gas question has been adopted by a proposed new NGO, Oil for Future Foundation of Borneo (OFF), being mooted by STAR vice-president Phillip Among.

The foundation, in the process of being registered, will use “Our Oil, Our Future” as “the new battle-cry for Sabah and Sarawak to bring about real reforms and make a difference for the better for the two poorest states in Malaysia”.

Phillip wants more than the 70 percent oil royalty being demanded by his other young compatriots.

He agrees that the 70 percent oil royalty should be backdated to 1976 and a statutory 8 percent interest per annum be paid, compounded annually, on the arrears.

Phillip is enough of a realist to think that Putrajaya will not play ball on the oil royalty issue.