KOTA KINABALU, Sept 15 — The federal government will honour its pledge to pay Sabah a 20 per cent royalty on oil revenue but needs at least six more months to finalise arrangements, said the economic affairs minister.
Datuk Seri Azmin Ali explained that the details such as the method of calculation still must be determined.
“There is a special Cabinet committee that was recently formed. There will be representatives from Sabah and Sarawak and myself.
“We are given six months to study the proposal from the states and have to come back to the Cabinet,” he said when met at the PKR office here today.
Azmin, who is on a three day visit to Kota Kinabalu, also said there were other considerations involved, including the country’s ability to afford the payments.
On Sabah Chief Minister Datuk Seri Shafie Apdal’s call for the royalty to be calculated of gross revenue instead of net profit as Azmin previously suggested, the latter said this was among issues being discussed.
“However I have also said that we need to look at the country’s finance today so that Petronas remains sustainable.
“We don’t want Petronas to have to close down just because they cannot afford to pay out the 20 per cent based on profit,” he said.
Azmin reiterated that the federal government was negotiating with Sabah, Sarawak, Kelantan and Terengganu on the topic, but declined to elaborate.
Earlier, he met with Shafie who told reporters that Azmin “gave a smile” when talking about the issue.
The 20 per cent royalty demand is among the longest-standing issues in the east Malaysian states and contained in Pakatan Harapan’s election pledges to Sabah and Sarawak.
Azmin, who also met with the State Economic Planning Unit, said he also held discussions on the devolution of powers to the state and related delivery systems.
“Priority has been given to the education sector so that dilapidated schools in the state can be upgraded as soon as possible.
“Unfortunately, projects under the previous government were not carried out with transparency and many were delayed. Some 37 schools were completed but 83 schools which were under Umno contractors were delayed and progress was too slow at 12 per cent.
“We will discuss with state authorities how to best proceed with these,” he said.