KUALA LUMPUR: The Sarawak government and Petronas announced today they have reached an agreement on oil and gas (O&G) management in the state as well as the sales tax on petroleum products.
The statement was issued by Sarawak Assistant Minister of Law, State and Federal Relations and Project Monitoring Datuk Sharifah Hasidah Sayeed Aman Ghazali and Petronas chairman Datuk Ahmad Nizam Salleh.
They said both parties agreed that the best approach in reaching an amicable solution was through a commercial settlement to create a stable business and investment environment.
“It is a sustainable approach to ensure the continuity of the country’s O&G industry especially during the current uncertain oil and gas market situation,” they said.
In this regard, Petronas has agreed to withdraw its appeal against the decision by the Sarawak High Court in relation to a judicial review request dated March 13 and, in return, the Sarawak government will drop all claims in its civil case against Petronas for the payment of the petroleum products sales tax.
The statement said Petronas, via its subsidiaries involved, would be paying in full the petroleum products sales tax imposed by Sarawak for 2019 amounting to RM2 bil, which is 5% of the products’ sales value.
The two parties have further agreed that future petroleum products sales tax would be reduced and staggered based on future negotiations, under the State Sales Tax (Taxable Goods and Rate of Tax)(Amendment)(No 2) Order, 2018.
“The Sarawak government also agrees that the sales tax will be limited to petroleum products stipulated under Order 2018; however, all agreements between Sarawak and Petronas under the Petroleum Development Act 1974 are still valid and in effect.
“Similarly, Petronas is still recognised as the national oil company with the authority to regulate the development of the entire O&G industry in the nation, in line with the Federal Constitution,” the statement said.
Petronas, together with the Sarawak government, will continue to develop the industry in the state and the corporation will continue to engage the state government to facilitate more active participation by the latter in investment opportunities in the state’s O&G industry, based on commercial terms.
“This includes collaborative opportunities at the operational level in Sarawak,” the statement said.
It added that to ensure the implementation of the commercial resolution, the Senior Minister (Works) and Finance Minister – Datuk Seri Fadillah Yusof and Tengku Datuk Seri Zafrul Aziz, respectively – would be tasked with chairing a joint committee for this purpose.
Sarawak Chief Minister Datuk Patinggi Abang Johari Tun Openg said with the settlement, a more stable business and investment environment can be created to drive the industry further in the state.
“The Sarawak government is a practical government and it wants to convince the O&G industry players that it is always business-friendly,” he said in a statement.
Hence, he said, the state government is committed to working together with the federal government and Petronas in further negotiations to ensure that all parties can achieve a settlement and an agreement on other related issues. – May 8, 2020, Bernama
