Sabah's 20% oil royalty demand still relevant, says ex-CM
PETALING JAYA : Sabah's long-standing demand for a 20% oil royalty from Petronas should not be sidelined by moves to involve the state in downstream oil and gas activities, says former chief minister Salleh Said Keruak.
Welcoming efforts to involve Sabah in downstream sectors such as petrochemical processing and refining, Salleh said such moves were a step toward local empowerment but must not be seen as a replacement for direct revenue entitlements.
'Royalty refers to direct revenue from resource extraction – a matter of entitlement, not merely economic collaboration,' he said in a statement today.
Sabah currently receives a 5% royalty from Petronas under a 1976 agreement, but the state has consistently argued this is insufficient, given its role as a major contributor to the country's oil and gas output.
The call for a 20% royalty was a key campaign promise of Pakatan Harapan in 2018, but was not implemented during its time in federal power.
The Usukan assemblyman also said that while discussions on the 40% revenue return from Putrajaya should continue, they must not overshadow the original and still relevant demand for the 20% royalty.
Salleh said the push for higher oil royalties once united Sabahans in their demand for a fairer share of the state's natural wealth and remains a 'just and relevant' aspiration today.
At the same time, he acknowledged the shift in focus to Sabah's constitutional right to receive 40% of net federal revenue collected from the state, as stipulated under the Malaysia Agreement 1963 (MA63).
'However, the reality is that its implementation remains unclear and is often debated from various legal and technical perspectives.
'In comparison, the oil royalty demand is more straightforward. It does not require complex interpretations – just mutual political will and understanding between the state and federal governments,' he said.
Sabah politicians have repeatedly urged Putrajaya to honour the 40% revenue-sharing formula enshrined in the Federal Constitution.
Use of the formula has been suspended since 1974, with the federal government paying increased special grants to Sabah and Sarawak.
Meanwhile, the Sabah Law Society has been granted leave to pursue a judicial review of the state's 40% revenue entitlement. The case is scheduled to be heard on July 7.
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