Petronas agrees to give Sarawak bigger share of oil, gas revenue

Under the agreement, Sarawak state will also be given more active involvement in the state's oil and gas industry.
Under the agreement, Sarawak state will also be given more active involvement in the state's oil and gas industry.PHOTO: BLOOMBERG

KUALA LUMPUR • Malaysian energy giant Petronas said yesterday that it has agreed to a commercial settlement that grants Sarawak state a higher share of revenue for oil and gas produced in the state.

Under the agreement, Sarawak state will also be given more active involvement in the state's oil and gas industry through management of onshore oil and gas resources via its state-owned energy firm Petros, according to a joint statement by Petronas and the state government.

Both Petronas and the state government said they remained committed to providing a "stable, conducive business and investment environment for the sustainable growth of the oil and gas industry" in the state.

In September, Petronas paid over US$700 million (S$937 million) in sales tax to Sarawak, months after both parties agreed to an out-of-court settlement over a legal challenge by the state for a higher sales tax payout.

The deal led to the resignation of Petronas chief executive Wan Zulkiflee Wan Ariffin, who quit after a disagreement with Prime Minister Muhyiddin Yassin over giving more oil money to Sarawak state, according to sources.

Sarawak is governed by a key political ally of Tan Sri Muhyiddin, who has grappled with a razor-thin parliamentary majority since taking power in March.

Sarawak's ruling coalition Gabungan Parti Sarawak contributes 18 seats in the federal Parliament to Mr Muhyiddin's Perikatan Nasional alliance that governs Malaysia.

Separately, Malaysia said yesterday it has no intention of reintroducing the goods and services tax (GST) to shore up government coffers.

"Reintroducing the GST is not among the latest options as we are looking at all options available," said Deputy Finance Minister II Mohd Shahar Abdullah in response to a question in Parliament on the issue. He said the ministry is focusing on taking care of the people's health, and ensuring economic recovery and resilience.

He added that the government is focusing on improving governance and has set up a multi-agency task force to better manage its finances while plugging leakages.

The 6 per cent GST was introduced in April 2015 but was abolished by the previous Pakatan Harapan (PH) administration in 2018. In its place, PH rolled out the sales and service tax in September 2018.

REUTERS, THE STAR/ASIA NEWS NETWORK

A version of this article appeared in the print edition of The Straits Times on December 08, 2020, with the headline 'Petronas agrees to give Sarawak bigger share of oil, gas revenue'. Subscribe