KUALA LUMPUR, Oct 15 — The federal government has maintained the existing method for oil royalty payments to Kelantan, Economic Affairs Minister Datuk Seri Azmin Ali said.

He said the government has agreed for the funds to be channelled directly to state coffers and consistent with the Federal Constitution.

Responding to the Kelantan mentri besar’s claim the state was receiving the “wang ehsan” ex gratia payments instead of a royalty for oil, the minister said he did not understand why the former made such a claim.

“For now, we are using the old method and it will not be handled by the federal government, but paid straight to the state government as a constitutional right.


“I am not sure about the allegation about that being wang ehsan as the PH principle is to channel fund directly to the state according to the set rate,” he told reporters at the Parliament lobby today.

The federal government pays a five per cent royalty on the value of oil extracted from the individual states.

This morning, Kelantan MB Datuk Ahmad Yakob told his state assembly that Kelantan only RM15.7 million in “wang ehsan” on September 17.


Ahmad was responding Finance Minister Lim Guan Eng’s remark on Monday that royalty payment had been made last month on Prime Minister Tun Dr Mahathir Mohamad’s instructions.