(Petaling Jaya, Thursday): The unilateral decision by the Barisan Nasional Federal Government to abrogate the 25-year-old Petronas oil royalty agreement to pay five per cent oil royalty to the Terengganu state government and hijack the annual payment of some RM800 million a year is not only "politicking" of the worst possible kind, a gross breach of faith with the people of Terengganu but also a negative signal to foreign investors that the Malaysian government cannot be trusted to keep its promises, commitments and agreements.
How can the Federal Government "play politics" to the extent of unilaterally abrogating the solemn agreement between Petronas and the Terengganu state government, when on 29th June 2000, Petronas president and chief executive officer Tan Sri Mohamad Hassan Marican said that "as long as oil is produced", 5% royalty will be paid to the state "based on the agreement signed in 1975"?
Has the Federal government directed Petronas to withhold the payment of the second half of the RM810 million oil royalty, which was scheduled to be paid to the Terengganu state government last week?
The first payment of RM432 million of the oil royalty this year was released to the Terengganu state government in February this year.
If the Federal government had instructed Petronas to withhold the second release of the 5% oil royalty this year, is this directive legal and enforceable?
The Federal Government should not allow party political considerations to intrude into the affairs of the state.
It should release the second half of the RM810 million payment
to Terengganu instead of unilterally abrogating the 25-year-old Petronas
oil royalty agreement while re-negotiating with the Terengganu state government
if it wants to change the terms of the agreement or refer the agreement
to the Federal Court or arbitrators if it insists on a new interpretation
of the Petronas-Terengganu oil royalty agreement.