(From left) Lo and Wong Soon Koh discussing during lunch break.
SIBU (Aug 6): Petroliam Nasional Berhad (Petronas) former chairman Tan Sri Ahmad Nizam Salleh told the High Court here today that the corporation was not given a discount on the State Sales Tax (SST) by the Sarawak Government for the year 2019.
Testifying at the defamation suit brought against Parti Sarawak Bersatu (PSB) president Dato Sri Wong Soon Koh by the state government via Zoom, Nizam agreed with the plaintiff’s counsel, Dato Sri JC Fong, that any allegation that a massive discount was given by the state government to Petronas was false.
He also agreed with Fong that the defendant’s statement saying that Petronas “owed about RM3.8 billion” was not true and inaccurate.
Nizam, who was a subpoena witness for the defence, explained further that the actual amount of tax to be paid was subject to actual verification of the volume and price.
He agreed with Fong that the RM3.897 billion was only an estimate and not the actual sum owed by Petronas.
He also agreed that the price of petroleum products fluctuates, and thus, the amount of SST to be paid at any given time or year would depend on the price of the petroleum products and the demand for them which are not constant.
Nizam said Petronas paid SST amounting to RM2.956 billion for 2019 and he handed the cheque to Chief Minister Datuk Patinggi Abang Johari Tun Openg on Sept 17, 2020, himself.
He also confirmed that the figure was the full amount of SST that Petronas has to pay for that year.
The amount he said was assessed by the controller of SST Sarawak based on returns submitted by Petronas on the actual sale value and volume of crude oil, Liquefied Natural Gas (LNG) and condensates sold by its subsidiaries for 2019.
Fong also asked about negotiations between Petronas and the state government on the SST.
Fong: In the joint statement dated 8th May, 2020, it was mentioned that ‘Petronas akan meneruskan runding dengan Kerajaan Negeri Sarawak’. Can you confirm that at the time when the Joint Statement was issued discussion or negotiations between Petronas and State Government were ongoing?
Nizam: We are restarting the negotiation.
Fong: And this negotiation also relates to the settlement of the cases in Court which were related to the imposition of SST on petroleum products, correct?
Nizam: One of the main items is on the resolution of the SST on the petroleum product.
Fong: As at 8th May, 2020, there was no formal agreement signed between Petronas and the state government, agreed?
Nizam: Can I clarify what agreement is that?
Fong: I meant the agreement relating to SST and the oil and gas issues which the Joint Statement said they would be continuing negotiation.
Nizam: Agreed.
Fong: Do you agree with the decision that the Joint Press Statement was not a formal agreement and therefore not yet binding particularly as negotiations are still ongoing?
Nizam: Yes.
During the examination in-chief by defence counsel Clement Wong on the total amount of SST to be paid by Petronas to the state government, Nizam said the amount of RM2 billion was an estimate based on the information at that time and it was still subjected to actual calculation to be verified by both sides.
He also said that the RM2 billion figure was worked out by the management team in Petronas.
Clement: Did you at any time before the publication of the Joint Statement verify on the said amount of RM2 billion?
Nizam: I am aware of the amount of RM2 billion is not conclusive and it is still subjected to the actual calculation under the Tax Law.
Clement: Since you were aware that the amount is not conclusive and it is still subject to actual calculation why the same is not stated in the Joint Statement?
Nizam: The whole intention of the Joint Statement as I said earlier, is to pave the way for all parties to come back to the negotiating table and find more amicable solution to the issues at hand.
Nizam continued that detailed checking and verification of the actual calculation would take a long time and it would not be good for the gas industry in the country and particularly in Sarawak and all other activities would be further delayed.
He also said that negotiation between the Sarawak government and Petronas regarding the SST began soon after the Joint Statement and the parties agreed to meet.
He told the court that there was no meeting or negotiation prior to the joint statement.
Pressing on the issue, defence counsel George Lo asked how it was possible that Petronas and the state government agreed on terms of the Joint Statement if there was no meeting or negotiation.
“When I say there was no prior meeting or negotiation. I am referring to the SST. As far as I am aware, those meetings and negotiations were part of the normal course of doing business in the usual oil and gas activities,” Nizam replied.
In the suit, the state government is claiming that Wong had defamed it in a statement issued on May 9 which questioned the settlement with Petronas on the state sales tax. It is suing Wong, who is also Bawang Assan assemblyman and a former state minister, for RM5 million.
Bukit Assek assemblywoman Irene Chang is expected to be called to the stand when the hearing resumes on Aug 16.