Sunday 13 January 2013

PDA 1974 CANNOT BE CHALLENGED






ACCORDING to the Federal and State Constitutions, it was agreed that land and all that is in and under it belongs to the State and not the Federal Government. The state decides on what happens to their land, forest, plantation, petroleum, and whatever resources found in the ground, on the ground, and offshore.

Kota Kinabalu Member of Parliament Hiew King Cheu had search into various related documents and he feels that some vital information should be disclosed in order to straighten up matter concerning the series of changes involving our precious “Black Gold”.

When the Federation Agreement was drawn up, the subject of the ownership of petroleum was not thought of in the Malaysia Agreement, with the result that no safeguards were written into the Constitution of the Federation of Malaysia on the ownership of oil found in the two East Malaysian states. 

No one expected that one day the Peninsula Malaysia states would discover oil – although oil was already discovered in East Malaysia and had benefited the states since its extraction that started in 1910.

Under the Federation Agreement, petroleum belongs to the state and that was why the ex-PM Tun Razak instructed Tengku Razaleigh to come out with the draft of a new law.

The only way the Federal government could take over the rights of the oil and gas would be to come out with a new law that allowed them to do so. If not it would be illegal for the Federal government to touch the oil and gas found in the East Malaysian states, and it belonged 100% to the state.

Hiew said this new law or Act called the Petroleum Development Act 1974 allowed the Federal government to unilaterally amend the terms of the Federation Agreement. Normally it requires all parties to the Agreement to agree to any amendment to that Agreement before it can be amended. In this case, only one party made the changes (unilaterally) and the other parties were forced to remain silent.

In return for the ownership and the rights, powers, liberties and privileges vested in it by virtue of this Act, Petronas shall make to the Federal government and the government of the relevant state such cash payment as may be agreed between the parties concerned. And there shall be established a Council to be known as the National Petroleum Advisory Council consisting of such persons including those from the relevant states as the Prime Minister may appoint.

Of course, in Sabah, not all parties initially agreed to these new amendments to the Federation Agreement. Sabah and Sarawak had 100% control of their oil production long before Petronas was incorporated. Therefore, they did not agree to ‘hand over’ their oil to the Federal government 13 years after forming Malaysia together.

Datuk Harris Salleh, witnessed by Joseph Pairin Kitingan, signed the Agreement with Petronas to accept 5% cash payment for the surrender of ownership rights of the Sabah petroleum to Petronas, and further agreeing to waive or reject the collection of royalties that were the rights of the Sabah government under Section 24(2) of the Sabah Land Ordinance.

But the Federal government did not take everything, they just grabbed 95%. They agreed to leave 5% for the state. The 1976 Supplementary Agreement that was signed between Petronas and Sabah stipulated that the 5% will be paid in cash twice a year, in March and September of every year, and that it will be called Royalty.  Unfortunately, Kelantan was given nothing and Terengganu was granted with a pity token sum only.

Petronas, is a creature of the ruling BN government, which is the owner of all the oil in the country, and the Prime Minister decides on how the cake is to be shared. The Prime Minister’s permission, approval and delegation are required for all upstream and downstream activities and operations.

“Now we know why the BN cannot afford to lose the next general election!” said Hiew.

With Petronas being granted the rights, powers, liberties and privileges in respect to petroleum under the Federation Agreement, the distressing part is that the Petroleum Development Act 1974 itself cannot be challenged in a court of law.

The Petroleum Development act 1974 should not have even been passed in the first place because according to the Federation Agreement 100% of the petroleum found in Sabah belongs to Sabah, and the Federal government should not have taken it away from Sabah.

If the Sabahans want to see more share of their precious “Black-Gold” which can relief them from poverty and to enjoy prosperity and development in the state, the only way out is to repeal this Act in Parliament through  a new government.

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