Time and again, we have listened to the opposition's over the top
vitriol on two very emotive issues to Sabahans; the promise of 15%
increase in oil royalty to Sabah and the allegation of federal
government taking away all Sabah resources and in return, giving almost
nothing back to Sabah. These issues must be answered factually and
timely to prevent anyone from being deceived into emotional shadow
boxing by the opposition.
Let's start
with the 15% increase in oil royalty issue. While on the surface it
sounds quite appealing, there are serious concerns over the mechanics
needed to bring the notion to fruition. Making promises is one thing;
executing them is another thing all together.
AN OVERVIEW
The petroleum
business is not a business arrangement for the Average Joe. The capital
outlay, technical challenges and financial risks are so great and
prohibitive that only the companies which have specialized expertise and
bottomless bank accounts normally dare enough to go into it.
Imagine
trying to lower drilling pipes, 4.5km from the sea level, in an
intensely-pressurized environment to search for the elusive black gold.
It requires special and extremely expensive equipment and expertise
which only the world’s oil major players (the likes of Shell, Murphy
Oil, ExxonMobil, etc) possess. The cost of exploration drilling could
run into hundreds of millions of dollars which would go to absolute
waste should no oil be found in vicinity of choice.
The nation’s
oil company, Petronas, like her counterparts in other developing
countries (Indonesia, Venezuela and Nigeria etc), does not have the
capacity to absorb the financial risk mentioned above.
It is not
financially equipped to spend billions on research and development and
take on the financial risks in the exploration and production phases
when the same billions are very much needed to be spent on the country’s
development.
In addition,
unlike Petronas - which primarily operates within Malaysia’s waters -
the oil majors enjoy economies of scale. They operate all over the
world which helps to defray the costs of R&D, the exploration and
production phases.
In the event
that oil is actually discovered, the capital that needs to be spent in
the subsequent phases is even more substantial. It is reportedly said
that the cost of the oil production phase could reach as much as RM2
billion. Sometimes even more.
To cushion
such uncertainties and spread the financial risk, Petronas enters into a
joint-venture agreement (known in the industry as Production Sharing
Contract or PSC and later, a variant called RSCs or Risk Sharing
Contracts) with multinational oil companies like Shell, Murphy Oil or
ExxonMobil and others.
These giant
oil companies are given a percentage of the oil revenue generated in
return of them bearing the financial risk and sharing technologies worth
billions in Research & Development.
PETRONAS TAKES ALL?
The
opposition always paint the perception that Petronas has been unfairly
profiting from Sabah’s oil revenue, so according to them, it is only
right for Petronas to give 15% extra oil royalty to Sabah.
Can it be done? Is it even doable? Let’s explore the realities.
While the
following example will not be able to capture every essence of all the
JV partnerships Petronas entered into, none the less, it is suffice to
give a fair view of what the realities are on the ground.
The illustrations below explain how much Petronas makes from Sabah oil.
For
every RM100 revenue derived from Sabah oil, 5% goes to the state’s
coffer while another 5% to the Federal coffer. Approximately 45% goes
into recovery cost, and the remaining 45% goes to the joint venture’s
gross profit.
In the end, it is clear that
Petronas’ profit, after splitting revenue with others and after paying
taxes, is only around 16.74%. If Petronas is asked to pay up the extra
15% from its profit margin, this will effectively render them unable to
pay their overheads, financial commitments and re-investment for future
income. The end result is financial blow which may lead to bankruptcy!
If Petronas is unable to pay
without jeopardizing its very existence, where would the additional 15%
come from then? Obviously there are two other choices left; the PSC
partner or the federal government.
It is very unlikely for the PSC
partner to give up what was already agreed in the contract between them
and Petronas. Furthermore, lower profit percentage would make oil
exploration in Malaysia unattractive to them.
If the joint venture partners
refuse jobs in Malaysia, we will not be able to extract our oil in an
economically viable manner. This may lead to a serious energy security
problem for Malaysia: with no one extracting oil, we may end up
importing all of our energy requirement!
With Petronas and its joint venture
partners unable to commit the extra 15% (or about RM12.5 billion) to
the oil producing states of Sabah, Sarawak and Trengganu, the other
option is of course to take it from the federal government which
receives dividend around RM30 billion annually from Petronas.
This option is not without its own ramifications.
With reduced dividend from
Petronas, the federal government will have less money for its budget.
This means there will be less public spending on subsidies, schools,
hospitals, police stations, roads and other infrastructures. Obviously,
the most impacted would be the non-oil producing states.
Anwar Ibrahim must have the moral
courage to inform the non-oil producing states that as a Prime Minister,
he will cut their federal allocated budget by RM12.5 billion.
Unfortunately this is not happening.
The last option available to Anwar
Ibrahim is to increase Sabah’s oil royalty by 15% but in order to ensure
he has enough funds available for the rest of the country, he will have
to cut Sabah’s federal allocation. Remember, cutting Sabah’s federal
allocation is within his prerogative as a Prime Minister. This option is
plausible given the fact he has never given any assurances publically
that he would not cut Sabah’s federal allocation which, at the moment,
is one of the highest among all the states in Malaysia.
It is actually funny how Anwar
hardly shares the specifics of his promise of 15% increase in oil
royalty with the rest of the country. Perhaps he knows very well that he
won't be able to provide explanation for them. Apparently, keeping
Malaysians in the dark makes the illusion easier to perform. In fact, I
remember asking opposition members, including Anwar Ibrahim himself, in
Parliament of the specifics but instead of an answer, I got a blank
response followed by sharp stares!
FEDERAL GOVERNMENT COLLECTS MORE THAN IT SPENDS IN SABAH
This is yet another irresponsible
claim by the opposition to gain sympathy votes in Sabah. It is a very
powerful lie which if not countered factually, could result in deep
division and hatred towards the Barisan Nasional federal government.
Let's address this issue
objectively and see if it is true that the federal government has been
taking so much of Sabah's resources (including oil money) but giving
back so little in return.
The following two illustrations show
what federal government collected in Sabah in 2011 and how much it had
spent in Sabah in the same year.
Contrary to lies spawned by the
opposition, the federal government actually spent more (by a whopping
RM4.736 billion) in Sabah in 2011 compared to what it collected in the
same year!
The statistics, which were made
available to me by Bahagian Analisa Cukai dan Bahagian Pengurusan
Belanjawan, Kementerian Kewangan Malaysia, went as far back as 2007 and
had breakdowns for each federal ministry.
It showed the same consistent trend of federal government spending more in Sabah than what it collected in each year. Nothing is more revealing than the truth and fact! Statistics, in the end, don't lie.
For the year 2012 onwards, there is
no reason to believe the trend will reverse itself especially when Dato
Sri Najib Tun Razak has made it very clear that special emphasis will
be placed on Sabah's development under his economic transformation
program.
Towards this, Barisan Nasional Sabah is happy to note that to date, the Prime Minister has not disappointed Sabahans.
*end*
Karim berkata, beliau menyokong keputusan Speaker Dewan Undangan Negeri (DUN) menolak usul ADUN Luyang dari Parti Progresif Sabah (SAPP), Melanie Chia, yang meminta kerajaan negeri menyemak perjanjian royalti minyak daripada 5 peratus kepada 20 peratus, pada persidangan DUN baru-baru ini.
ReplyDeleteKarim bersetuju dengan Speaker bahawa Petronas menyumbang dengan ketara kepada ekonomi negeri dan memberi manfaat kepada kehidupan rakyatnya.
"Petronas sudah pasti membelanjakan berbilion ringgit untuk melaksanakan pelbagai projek di Sabah yang memberi keuntungan terus kepada rakyat termasuk kontraktor tempatan serta faedah sampingan lain untuk dinikmati rakyat Sabah.
Delete"Dan saya percaya faedah sampingan dari projek itu lebih banyak daripada kadar royalti yang diminta di dalam usul," katanya
Memetik beberapa projek yang dijalankan oleh Petronas di negeri itu, Karim berkata, ini petanda baik bagi rakyat dan negeri Sabah serta menambah projek berkenaan dijangka bertindak sebagai pemangkin kepada pertumbuhan ekonomi Sabah, meluaskan industri minyak dan gas serta sektor berkaitan selain menggalakkan faedah sampingan lain untuk faedah sosio-ekonomi negeri.
DeleteIni termasuk RM3.8 bilion Terminal Minyak dan Gas Sabah (SOGT), Loji Kuasa 300MW bernilai RM1.5 bilion di Kimanis, satu loji janakuasa mega penghasilan baja sedang dibina di Sipitang bernilai RM4.6 bilion dan terminal pengisian semula gas LNG di Lahad Datu bagi membekalkan gas asli kepada cadangan Loji Kuasa Lahad Datu 300MW yang baru, katanya.
DeleteTerminal dan loji kuasa itu dijangka membabitkan kos RM2.2 bilion.
Karim juga memuji inisiatif Petronas untuk mengembangkan projek huluan dan hiliran gas serta minyak sebagai sebahagian daripada rancangan syarikat berkenaan dalam usaha membangunkan industri itu di negeri ini.
DeleteProjek berkenaan yang melibatkan perbelanjaan modal gabungan RM45 bilion, akan menyaksikan permintaan mendadak dalam aktiviti minyak dan gas di Sabah.
Delete