Oil royalty has nothing to do with territorial waters, Zaid tells finance minister

Oil royalty payments depend on agreements between states and the federal government and have nothing to do with territorial waters, said former minister Zaid Ibrahim.

(FMT) – The former law minister said this in response to finance minister Tengku Zafrul Aziz’s remarks that there would be no oil royalty payment to any state in the peninsula, including Kelantan.

In a written reply to the Dewan Rakyat, Tengku Zafrul had said although petroleum production was being carried out close to Kelantan, it was taking place outside the state’s waters. He added that Kelantan would continue to receive “wang ehsan” (goodwill payment) for petroleum produced off its coast.

Zaid said when the Kelantan government gave Petronas the rights to petroleum development, the agreement entitled the state to a payment of 5% from the oil revenue.

“It (royalty) has nothing to do with territorial waters despite the Act (Petroleum Development Act 1974) mentioning the distance of 12 nautical miles (for petroleum production) from Kelantan, Terengganu and so on.

“Sabah and Sarawak still get their oil royalties despite (the oil fields) being outside three nautical miles, so it does not matter,” he said in a Facebook post.

Zaid said the PAS-led Kelantan government had previously sued the federal government for oil royalty but after 10 years had dropped the case because it was contented with the RM600 million given to the state by former prime minister Dr Mahathir Mohamad.

“For Umno, there is no difference. Annuar Musa (Ketereh MP) says he is envious of the development he is seeing in Sarawak.

“He does not need to be jealous. He needs to feel that Kelantan has been fooled and ‘played’. He must demand the rights of the Kelantan people,” Zaid said.

Zaid said the budget of RM600 million a year to Kelantan was not enough for state civil service salaries and questioned how the state could progress without enough money.

“The only (revenue) source is oil. That is our right. Therefore, I hope the people of Kelantan will not be fooled. Let us unite and demand this right. This is our only source to overcome poverty in Kelantan,” he said.

Recently, the Kelantan government expressed disappointment with Putrajaya’s confirmation that Petronas would not be paying any oil royalty to the state.

Kelantan deputy menteri besar Mohd Amar Nik Abdullah said he was shocked with the statement as the state government had hoped for oil royalty from the federal government.