Sarawak CM pledges to make Petronas pay 5pc sales tax on petroleum products

A logo of a Petronas fuel station is seen against a darkening sky in Kuala Lumpur February 10, 2016. — Reuters pic
A logo of a Petronas fuel station is seen against a darkening sky in Kuala Lumpur February 10, 2016. — Reuters pic

KUCHING, Oct 8 — Sarawak Chief Minister Datuk Patinggi Abang Johari Openg today stressed that he will make Petroliam Nasional Berhad (Petronas) pay the 5 per cent sales tax on the export of petroleum and petroleum products from its operation in Sarawak.

“I will fight to the last in order to get Petronas to pay,” he said at a business engagement session with the business community here.

He was answering a question from the floor on what steps he would take since Petronas has yet to pay the 5 per cent sales tax to-date.

“Under our law (Oil Mining Ordinance), Petronas has to pay the sales tax. That is our right.

“When Petronas is operating in Canada, they follow the law of that country and when they operate in Sarawak, they must also comply with our law,” the chief minister said.

“If they breach our law, then the law will take its course,” he said.

Abang Johari said the state government can impose 10 per cent sales tax, but has decided to settle for 5 per cent after taking into consideration the situation facing the petroleum industry at the moment.

He said he is willing to reduce the percentage if they request for it, but he wants an equivalent value in return to be made through some commercial arrangements.

He said these include increasing the state’s equity in LNG plants in Bintulu from the present 25 per cent and the participation in the upstream and downstream activities on oil and gas in Sarawak waters.

Abang Johari said the total revenue on the export of oil and gas products from Sarawak is about RM40 billion a year.

“So what is RM3 billion to Petronas?” he asked, referring to how much Sarawak would receive from the imposition of 5 per cent sales tax a year.

The chief minister said he has already submitted proposals to the federal government on the production sharing arrangement between the state government and Petronas.

“There are certain areas which are quite grey. That is why we are still negotiating with the federal government over these grey areas,” he said.

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