Kelantan discontinues proceedings against Putrajaya on oil royalty

The Kelantan PAS-led government has today discontinued its legal action against the Federal government regarding the oil royalty case.

(The Edge Markets) – Kelantan government lawyer Aleeya Ilyana Ahmad Mahreez said parties recorded their discontinuance today before High Court judge Datuk Ahmad Bache.

“There is no order as to costs. We will be filing the discontinuance effective after this,” she told reporters.

Aleeya, however, did not disclose the amount when asked how much the Kelantan government will be getting.

Senior federal counsel Natrah Idris appeared for the government while Shukran Shafiq came for Petronas

Previously, it was reported that the Kelantan government had withdrawn its suit against national oil company Petroliam Nasional Bhd (Petronas) on May 21 also before Justice Ahmad.

This follows parties having indicated the matter to the Federal Court earlier.

It was previously reported that Economic Affairs Minister Datuk Seri Mohamed Azmin Ali claimed the Kelantan government had begun withdrawal of the proceedings, which he expected  to be settled in April.

“After the proceedings are settled, we will execute what we have promised by making the payment of oil royalty directly to the state government,” Azmin had said.

Then Kelantan Menteri Besar, the late Datuk Nik Aziz Nik Mat, had led his exco members in filing the suit against Petronas on Aug 30, 2010, claiming that the state had been discriminated against for not getting oil royalty payments for activities off-shore of its sea.

Nik Aziz had then engaged senior lawyer Tommy Thomas to act for the state government. Thomas is now the Attorney General in the Pakatan Harapan-led government.

In its suit, the Kelantan state government was seeking a court order for specific performance of the Kelantan Petroleum Agreement dated May 9, 1975.

The agreement, it said, required Petronas to make annual cash payments to the state government amounting to an equivalent of 5% of petroleum won and saved on-shore and off-shore Kelantan and sold by Petronas, its agents or contractors.

The Kelantan government was accusing Petronas of breaching its obligations under the Petroleum Development Act 1974, the Kelantan Petroleum Agreement and the Kelantan Grant.

In its suit, the Kelantan state government also said Nik Aziz had written a letter dated Dec 31, 2009 to the president and CEO of Petronas requesting for cash payments to be paid to the Kelantan state government for petroleum won off-shore Kelantan.

According to the details of the writ of summons, the Kelantan government said it had received a reply from the president and CEO of Petronas dated Feb 2 and April 12, 2010, stating that the state government was not entitled to receive any cash payments.

Through the legal action, Kelantan wants an inquiry be ordered to require Petronas to fully disclose all the relevant facts related to the cash payments payable to Kelantan and for all arrears of to be accounted and paid within one month of a court order.

The Kelantan government was also seeking a further order for all future cash payments be paid for petroleum produced off-shore, damages, 8% per annum interest, costs and other reliefs.

The Federal government stood in as an intervenor in the suit later in 2010.

Besides the Kelantan government, the then PAS-led Terengganu government had filed a similar suit where Thomas acted as its counsel, but they later withdrew it as reported on April 23, 2012.