Ku Li says Petronas must pay Kelantan oil royalties

(The Malaysian Insider) KUALA LUMPUR, July 26 – Former Petronas chairman Tengku Razaleigh Hamzah has rubbished reasons given by the federal government over its dismissal of the Kelantan state government’s claim on oil royalties and says that the national oil company is obligated by law to pay up.

The Kelantan state government has claimed that is is owed RM1 billion in royalties from oil that has been extracted in an offshore area bordering Thailand.

In response, Information Communication and Culture Minister, Datuk Seri Rais Yatim had said that the Kelantan demand for oil royalty had no legal basis and was made to earn political mileage.

According to Tengku Razaleigh however, the vesting deed agreement, which he signed on behalf of Petronas as founding chairman and CEO, entitles the state to five per cent of any revenue derived from hydrocarbon deposits found on or offshore of the state.

“If I am chairman still of Petronas, I will pay without all the fuss,” he told The Malaysian Insider in an interview earlier this week. “And I feel all the more it should be paid because I signed the agreement! There is no two ways about it. It must be paid.”

The former finance minister declined to comment on whether political considerations played a part in the decision not to pay Kelantan oil royalties but noted that Terengganu oil royalty payments were suspended when it was under the opposition but was reinstated when it returned to Barisan Nasional rule last year.

“I don’t know what kind of politics they are playing,” he said.

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