Rafizi claims sovereign rating will drop, interest for national debt will rise if Petronas' contribution to Malaysia's coffers reduced

Borneo Post

3 days ago

Datuk Seri Mohd Rafizi Ramli — Bernama photo
KUCHING (Aug 4): Malaysia's sovereign rating may drop and Putrajaya would likely pay more for national debt interest, currently at RM48 billion per annum, if Petroliam Nasional Berhad's (Petronas) contribution to the national coffers is reduced, said Datuk Seri Mohd Rafizi Ramli.
The former economy minister said Petronas has been contributing RM35 billion to the federal government, part of which is channelled for development in Sarawak.
'If Petronas loses RM20 billion (to Sarawak), this would mean that the federal government loses RM20 billion and the country's sovereign rating will definitely drop.
'This also means that our national debt's interest will soar, from the current RM48 billion per annum to possibly RM60 billion per annum. Hence, this issue has to be handled delicately,' he said on his recent podcast 'Yang Berhenti Menteri'.
Mohd Rafizi was commenting on negotiations between Putrajaya and the Sarawak government on the state's oil and gas rights.
According to him, the RM35 billion contributed by Petronas to the federal government was also used to develop schools and hospitals as well as providing public services such as the police and army in Sarawak.
'Although that money does not directly go into the pocket of Sarawak, the federal government has been providing these services for Sarawak,' he said.
Mohd Rafizi claimed he has nothing against the notion that Sarawak is rich in oil and gas resources and hence should be getting back more for its contributions over the years.
Despite this, he said the federal and Sarawak governments have to take foreign investments into consideration given that Petronas had sealed contracts with investors.
Under the existing contracts, he said Petronas is expected to deliver on promises made since investors had already pumped in money.
'Now, if Petros (Petroliam Sarawak Berhad) wants to come in to have a share, the existing contracts will be affected and this may put future investments at stake.
'Yes, Sarawak says they are rich in oil and gas, by all means, go explore the oil and gas fields you have. Exploring a field would require RM3 billion to RM4 billion, and if I'm an investor, I may consider investing in other areas like Indonesia or Suriname,' he said.
He was quick to add: 'This is the balancing that we have to consider.'
In terms of legal aspects, Mohd Rafizi opined that the issue with the Territorial Seas Act (TSA) 2012 is that it was passed in Parliament without the acknowledgement of the Sarawak State Legislative Assembly (DUN).
Under the TSA 2012, Sarawak's waters were limited to three nautical miles from the coast and whatever was beyond three nautical miles came under the free economy zone belonging to the federal government, he explained.
'Based on the current legislation, be it Terengganu and Kelantan, beyond three nautical miles, it belongs to the federal government. The problem with Sarawak is that they have their own Ordinances and when TSA was passed in Parliament in 2012, it was not tabled in DUN Sarawak.
'When we talk about TSA 2012, well, Sarawakian MPs supported in Parliament. It's just that TSA was not tabled in DUN Sarawak, and the federal and Sarawak governments have their respective views about this matter. A says so and B says otherwise,' he said.
Prior to the TSA 2012, Sarawak had sovereignty over waters up to 12 nautical miles from its shores.
Mohd Rafizi said while politicians can air their views, Putrajaya and the Sarawak government must take caution when dealing with Petronas-Petros issues.
'The devil is in the details and we must not overlook the impact on Petronas, Petros, and the oil and gas industry as a whole.
'Federal government and Sarawak government must have proper planning when it comes to the negotiations between Petronas and Petros.
'Funding for Sarawak can be increased but this should be done in a way that is not affecting other aspects like the sovereign rating of Malaysia,' he added. lead Mohd Rafizi Ramli oil and gas rights Petronas Petros