Mahathir’s U-turn: 20% oil royalty will come from profits, not revenue

(The Edge) – The 20% oil royalty recently promised by the Pakatan Harapan (PH) federal government to oil-producing states will be based on profits and not revenue, confirmed Prime Minister Tun Dr Mahathir Mohamad today.

“[The 20% oil royalty] will be based on profit made by Petronas in the [state’s] area. What we collect in Terengganu will not be paid to Sarawak or Sabah,” Dr Mahathir said at a press conference today.

This was in contrast to the Pakatan Harapan manifesto for the 14th General Election.

The manifesto had pledged that oil-producing states would receive a 20% oil royalty, which critics say is based on the revenue of oil and gas extracted from the State, rather than profits obtained after subtracting expenses.

Dr Mahathir told the Dewan Rakyat on July 19 that there would be no deviation from PH’s promise of giving 20% royalty to oil-producing states in the country.

Malaysian oil-producing states include Sabah, Sarawak, Terengganu and Kelantan. It was reported that Sabah and Sarawak currently receive 5% oil royalty from Petronas based on topline numbers.