The promise for more oil royalties was defunct from the start. FMTNews Petronas OilRoyalty MA63
Brent crude oil prices dipping below US$30 and US oil prices turning negative for the first time in history is bad news for Sabah and Sarawak, which are dependent on oil royalties as a major source of revenue.
With additional expenditures allocated to fight Covid-19, the state government funds will be fully stretched to continue its development agenda.Sabah expects to collect RM50 million every month following its decision to impose a 5% sales tax on all petroleum products. “In return for the ownership and the rights, powers, liberties and privileges vested in it by virtue of this Act, the Corporation shall make to the Government of the Federation and the Government of any relevant State such cash payment as may be agreed between the parties concerned.”
According to Reuters, a 20% royalty would roughly mean a payment of US$7bil or nearly RM29bil a year to Sabah and Sarawak. In December last year, Mahathir floated the idea that the government could sell Petronas shares privately to states such as Sabah and Sarawak where the company has most of its energy assets.
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