Masing: Petroleum Development Act 74 null and void in Sarawak, Sabah


Tan Sri Datuk Amar Dr James Jemut Masing

KUCHING: Sarawak and Sabah need to endorse the Petroleum Development Act 1974 (PDA74) for the law to be implemented in these two states.

Since the PDA74 was never endorsed by the legislative assemblies of Sarawak and Sabah, it is therefore null and void in the two states, Deputy Chief Minister Tan Sri Datuk Amar Dr James Jemut Masing said.

However, the Parti Rakyat Sarawak (PRS) president said he would not know if the same is applicable to Terengganu, another oil producing state, as it might have different laws. On June 11 this year, PRS Youth deputy publicity chief Surai Anthony Abel lodged a police report at the Sungai Maong police station here to express PRS’ view that the PDA74 is null and void following an article entitled ‘Petronas seeks court clarification on PDA 1974’ published in The Borneo Post the previous day.

The youth leader claimed that PDA74 contravened the Malaysia Agreement 1963 (MA63) and the Malaysian Constitution. As such, Petronas should not be seeking court clarification because PDA74 could not supersede the MA63 and Malaysian Constitution, he asserted.

He urged the police to probe all the illegal activities committed by Petronas, particularly those related to Sarawak and refer such case to the Sarawak Attorney General’s Chambers.

Last Wednesday (July 25), a national online news portal reported that the Pakatan Harapan (PH) government could not implement the proposed 20 per cent oil royalty payment to producing states because it contravenes the PDA74.

The portal quoted Economic Affairs Minister Datuk Seri Azmin Ali telling the Parliament that the implementation of the proposal would take time as the provisions of the Act needed to be amended first.

“The proposal cannot be carried out (now) as it contravenes the Petroleum Development Act (PDA). For this to be done (20 per cent royalty), it will take time as amendments need to be carried out on the PDA,” he said during the question-and-answer session at the Parliament on Wednesday.

Azmin said the Act fixed the oil royalty at 10 per cent of net profit to the federal government and oil-producing states and that the PH’s Blue Book merely promised a fair distribution of oil royalty to these states.

“At this time, Petronas needs to pay 10 per cent cash payment of gross production of oil and gas to the (federal government). From this amount, five per cent is taken by the federal government and state government respectively. Petronas makes this payment twice a year, in February and August.

The 10 per cent cash payment is the gross value per barrel at market value.

“Payment is made regardless of whether oil production at the (drilling) site is profitable or not. From this value per barrel, 70 per cent from the gross production of oil and gas is actually the cost of recovery that is borne by Petronas,” he said, adding that the oil company is further saddled by other necessary payments like the Petroleum Income Tax Act.

Azmin added that PDA 1974 clearly states that the giving of royalty requires an agreement from oil-producing states.