Thu04242014

LAST_UPDATEWed, 23 Apr 2014 10pm

Kelantan Applies To Stop Petronas From Paying Royalties To Federal Govt

SEEKING AVENUES: Husam (center) speaking to the Press at the KL courts after filing the application to prevent Petronas from paying oil royalty to the federal government. Pic: Shahrin Yahya/FZ.comSEEKING AVENUES: Husam (center) speaking to the Press at the KL courts after filing the application to prevent Petronas from paying oil royalty to the federal government. Pic: Shahrin Yahya/FZ.comKUALA LUMPUR: The Kelantan state government has filed an application for a court injunction to prevent national oil company Petroliam Nasional Bhd (Petronas) from paying the state's oil royalty to the federal government.

Kelantan state executive council member Datuk Husam Musa and his lawyers filed the application and supporting affidavits at the KL High Court registry today.
 
Husam told reporters that the injunction application follows from a remark by Petronas president and CEO Tan Sri Shamsul Azhar Abbas last November that the distribution of royalties to states comes under the federal government's jurisdiction, not Petronas'.
 
The national oil firm chief also said Petronas does not owe Kelantan any royalties for oil extracted in the state.
 
Referring to an earlier suit filed by the Kelantan government against Petronas for royalties the state claims it has not been paid, Husam said: "Our matter (first suit) has not yet been decided by the court. We worry that if we win, we won't be able to get the royalty payments (because it has been paid to the federal government)." 
 
Husam, who heads the state committee on petroleum, added that the Kelantan government wanted the oil royalty payments to be paid into an escrow account pending disposal of its suit against Petronas.
 
Kelantan, which is administered by Pakatan Rakyat, first sued Petronas and the federal government in August 2010 in its bid for oil royalty payments for all petroleum pumped offshore Kelantan.
 
The case is pending before the Federal Court where the Kelantan government is due to appeal High Court decisions, including the denial of access to Petronas documents.
 
Meanwhile, Husam also told reporters that he will write a letter to Petronas to initiate a study on whether there are onshore oil reserves in Kelantan.
 
Husam said he has received information that there are indeed onshore oil reserves near Kota Baru but wanted the national oil firm to confirm the matter.
 
The legal action by Kelantan underscores the tensions in federal-state relations particularly in states administered by the Pakatan Rakyat coalition.
 
The federal government has insisted that it will pay Kelantan "wang ehsan" or compassionate payment to Kelantan in place of oil royalties.
 
But Husam maintains that Kelantan is entitled to oil royalty and not "wang ehsan", which is dependent on the discretion of the federal government.
 
Kelantan is basing its claim for oil royalty on the Petroleum Development Act 1974 and an agreement between the Kelantan state government and Petronas signed on May 9, 1975. Under the agreement, Petronas will pay Kelantan 5% of the value of petroleum produced in the state.



- Chua Sue Ann / FZ.com
http://fz.com/content/kelantan-wants-injunction-against-petronas




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