Razaleigh says Petronas legally bound to pay oil royalty to producer-states
(Free Malaysia Today) – Gua Musang MP Tengku Razaleigh Hamzah said that Petronas is legally bound to pay oil-producing states the 5% directly based on the Petroleum Development Act.
“The States’ right to 5% of profit derived from the extraction of any petroleum resources is based on a quid pro quo according to which the States vested entirely and in perpetuity all their rights and claims to petroleum resources to Petronas,” said Razaleigh at his blog, razaleigh.com.
The former Finance Minister said that the government’s decision to withhold oil royalty payments to the Kelatan state government violates the agreement signed between each state government and the national oil corporation under the Petroleum Development act.
He questioned whether the corresponding Vesting Deed by which Sabah and Sarawak vested all their rights in their petroleum resources to Petronas remains in force if the Federal government continues with their decision of offering “compassionate payment” to Kelantan.
“This casts serious doubt on the Malaysian Government’s respect for the sanctity of contracts and the rule of law,” he said.
