KOTA KINABALU, May 14 — Petronas’ new agreement with Sarawak does not have any bearing on Sabah, who just imposed a 5 per cent sales tax on petroleum products beginning last month.

Sabah Chief Minister Datuk Seri Shafie Apdal said that the state was sticking to its 5 per cent sales tax while it continued to pursue a 20 per cent oil royalty deal with the federal government that it has been eyeing for decades.

“That’s their negotiations with Petronas. We’ve already imposed the sales tax. We have an understanding with them and other petroleum companies,” said Shafie when asked to comment on Sarawak’s new agreement with Petronas and the federal government.

Shafie said that he has been in touch with the oil companies and there was a plan to meet, but declined to say when.


“I’ve been in touch with some of them — Shell and others. What is due to Sabah should be given. We will follow the rules and regulations. We have a good working relationship with them and we are working closely with them on the sales tax. Most of the companies have done their part to register what needs to be done,” said Shafie.

He also said that the previous plan before the new Perikatan Nasional (PN) government came to power was to convert the 20 per cent royalty payout into shares as the government did not have enough budget for the payout, and the shares would mean the state could co-own the petroleum.

“But that didn’t materialise. The Petronas president is aware of this. But we will pursue them. Meanwhile, the sales tax will go ahead,” he said.


In the new deal struck between Sarawak and Petronas, the oil company will pay the full sales tax imposed for 2019 that amounts to some RM2 billion. Petronas also agreed to withdraw the appeal of the Sarawak High Court’s decision on the application for Judicial Review on March 13, 2020 and the Sarawak state government will also drop all civil litigation against Petronas for the payment of sales tax on petroleum products.

Sarawak had also agreed that future petroleum products sales tax would be lower and staggered based on future negotiations, under the State Sales Tax.