KUALA LUMPUR • Malaysia's energy-rich Sarawak state will pursue legal proceedings against national oil company Petronas over the non-payment of sales tax, backtracking on a settlement agreement reached last month, national news agency Bernama reported.

Petronas and Sarawak had reached the settlement deal, with the energy company agreeing to pay RM2 billion (S$653 million) in back sales taxes, and Sarawak agreeing to drop a civil lawsuit it filed last year to seek the funds.

However, a Sarawak state body said on Wednesday that the state would continue its civil case against Petronas if no final decision was reached through further negotiations with the company on the tax payments, Bernama reported.

The joint statement issued by Petronas and the state last month regarding the settlement was not a "formal agreement", Bernama reported, citing Datuk Amar Mohd Asfia Awang Nassar, chairman of the Sarawak state assembly consultative committee.

"It was a statement based on discussions back then, and today, I am making it clear that we will continue our civil case against Petronas," said Mr Amar Mohd Asfia.

Petronas did not immediately respond to questions from Reuters on the Sarawak state official's reported comments.

Sarawak took Petronas to court last November, saying the national oil firm was the only energy company operating in the state that had not paid the 5 per cent state sales tax that was imposed on Jan 1 last year.

Malaysia's Sarawak and Sabah states - both located on Borneo island and holding much of the nation's oil and gas reserves - have long asked for higher oil royalties from Petronas.

Petronas is the sole manager of Malaysia's energy reserves and a significant revenue source for its only shareholder, the federal government.

REUTERS