Muhyiddin (standing, second right) shares a light moment with Abang Johari  while witnessing the signing of the documents of the commercial settlement agreement between Sarawak government and Petronas in Kuala Lumpur, performed by Jaul (seated, left) and Tengku Muhammad Taufik. Standing, at right, is Tengku Zafrul. — Bernama photo

Three historic moments signify efforts  by  Sarawak government
to proclaim authority over state’s resources

SARAWAK recorded three historic moments in 2020, all of which signified the state’s efforts in asserting its rights and authority over its own resources.

One was the signing of the commercial settlement agreement involving the Sarawak government and Petroliam Nasional Bhd (Petronas).

The second was the passing of the amendment to Article 16 of the Sarawak Constitution to allow Sarawakians become members of the Sarawak State Legislative Assembly (DUN) at the minimum age of 18.

The third was the launch of its very own liquefied petroleum gas (LPG) product under Petroleum Sarawak Bhd (Petros) brand.

The commercial settlement agreement between Sarawak government and Petronas was signed in Kuala Lumpur on Dec 7, where the signatories comprised State Secretary Datuk Amar Jaul Samion, acting State Attorney-General Saferi Ali, Petronas president and chief executive officer Tengku Muhammad Taufik Tengku Aziz, and Malaysia Petroleum Management senior vide-president Mohamed Firouz Asnan.

Witnessing the ceremony were Prime Minister Tan Sri Muhyiddin Yassin, Chief Minister Datuk Patinggi Abang Johari Tun Openg, and Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.

The agreement would establish a framework between the Sarawak government and the national oil corporation, resulting in Sarawak being more actively involved in its onshore oil and gas (O&G) activities through Petros.

It would also open new avenues for collaboration between Petronas and Petros, including the development of the Sarawak Gas Master Plan and ongoing efforts to encourage more participation by Sarawakian vendors.

Specifically, both Sarawak government and Petronas would work together in outlining a consultative framework towards enhancing the collaboration through a structured and formalised avenue comprising a joint coordination committee and an annual strategic dialogue.

According to Tengku Muhammad Taufik, these platforms would be co-chaired by Abang Johari and Petronas chairman Tan Sri Ahmad Nizam Salleh.

The landmark deal could perhaps be seen as an amicable tie-up between the two as prior to this, both sides had gone to court to justify their respective stands.

On Nov 21, 2019, the Sarawak government initiated legal action against Petronas over the State Sales Tax (SST) on its O&G products.

Earlier in January that year, the Sarawak government imposed a five-per cent SST on petroleum products under the state’s Sales Tax Ordinance 1998, which Petronas refused to pay – claiming it as ‘being unconstitutional’.

In demanding payment from Petronas, Sarawak had issued notices of assessment (NOAs) dated Aug 28, 2019; Oct 7, 2019; and Nov 13, 2019 – involving more than RM1.3 billion in SST.

A writ of summons and statement of claim were filed at Kuching High Court Registry as an effort to recover the SST owed to Sarawak by Petronas.

On March 13, 2020, Kuching High Court Judge Azhahari Kamal Ramli ruled that Article 95B (3) of the Federal Constitution provided that the Legislatures of Sabah and Sarawak could make laws for imposition of sales taxes.

He said the provision stated that any sales tax imposed under state law to be deemed among the matters enumerated in the State List, the State Sales Tax Ordinance and any subsidiary legislation made thereunder, would be constitutional and valid.

He also dismissed Petronas’ judicial review application to quash the NOAs.

Petronas went on to appeal against the Kuching High Court’s decision, but on Aug 3, 2020, it withdrew this appeal.

The Sarawak government, at the same time, also withdrew its cross-appeal over the jurisdiction issue of the High Court on the SST.

A three-man bench of the Court of Appeal comprising justices Datuk Abdul Karim Abdul Jalil, Datuk Hadhariah Syed Ismail and Datuk Mohd Sofian Abd Razak struck out the appeal and cross-appeal, and ordered each party to bear their own costs.

Petronas was represented by Counsel Datuk Malik Imtiaz Sarwar, while State Legal Counsel Dato Sri JC Fong appeared for the Sarawak government and the Comptroller of SST Sarawak.

The court proceedings were conducted via video conferencing.

Co-counsel Alvin Chong for Petronas, who attended the proceedings, applied for the appeal to be withdrawn.

Also appearing for the Sarawak government and the Comptroller of SST Sarawak was State Attorney-General Datuk Talat Mahmood Abdul Rashid.

Abang Johari strikes a special pose next to stacks of Petros-branded LPG cylinder tanks after performing the launch in Kuching on Dec 2. Seen from the Chief Minister’s right are Hamid and Minister of Utilities Dato Sri Dr Stephen Rundi. ­­­— Photo by Chimon Upon

Amended Bill meant to safeguard state’s rights

The Constitution of the State of Sarawak (Amendment) Bill 2020 to define ‘resident in the state’ to qualify for election into the State Legislative Assembly (DUN) was passed on Nov 12, during the Second Meeting of the Fifth Session of the 18th DUN Sarawak.

Tabled and moved by Minister of Tourism, Arts and Culture Datuk Abdul Karim Rahman Hamzah, the amendment meant to specify only two categories of persons would qualify as ‘resident in the state’ — a citizen born in the State of Sarawak, whose parents or either of them was also born in the state and he is normally resident in the state; or a citizen, though not born in the state, whose parents or either of them was born in the state and he is normally resident in the state.

The amended Bill had also proposed that the qualifying age to be elected as a DUN member be lowered from 21 to 18.

Only nine members of the Opposition objected to the Bill – the objection specifically pointed to the second part of the Bill, which sought to amend the expression ‘resident in the state’ in Article 16 Clause 2(1)(c) of the Sarawak Constitution.

Before the passing of the Bill, Abdul Karim said those who were against it might not have understood it in depth because the fresh Bill was revealed to them only one day earlier.

The short notice was because the Bill had to be deferred by DUN Sarawak Speaker Datuk Amar Mohamad Asfia Awang Nassar after it was initially tabled and debated on Nov 10.

The deferment was called because there were anomalies that had to be clarified.

In the earlier Nov 10 tabling, Abdul Karim said it would be necessary for the amendment to be made to Article 16 of the Constitution of Sarawak so that the matter would be consistent with the Federal Constitution.

The Federal Constitution (Amendment) Act 2019 [Act A1603] was passed by Parliament on July 16, 2019, and came into force on Sept 10, 2019, and had inter alia amended the age qualification of persons to be elected as DUN members.

Abdul Karim said the previous Article 16 of the State Constitution did not define who the ‘resident in the state’ was and therefore, the amendment meant to incorporate the definition, but confining it to Sarawak’s constitutional authority.

LPG milestone for Sarawak

On Dec 2, Sarawak marked a historic milestone with the launch of its very own LPG.

The red-coloured, Petros-branded LPG cylinders should soon become among the regular fixtures in homes, businesses and industries across Sarawak, with the distribution to kick off in Kuching and Samarahan next year and extended to other areas across the state in 2022.

Abang Johari said each 14kg tank would be sold at a subsidised price of RM26.60.

“We’re giving around 50 per cent subsidy for the Petros LPG (cylinder) as I was told that the original price was actually around RM50 – quite expensive.

“The Petros LPG would be sold at RM26.60 per 14kg cylinder as it is a controlled item under the Ministry of Domestic Trade and Consumer Affairs,” the Chief Minister said in his speech at the launch ceremony held in Medan Kubah Ria in Petra Jaya, Kuching.

Abdul Karim delivers his winding-up speech at the DUN Sarawak si­tting in this photo taken on Nov 12.

He also said there were plans to export the gas cylinders to neighbouring Indonesia.

“The Governor of West Kalimantan has wri­tten a le­tter to me requesting for Sarawak to supply LPG to West Kalimantan, especially villages long the (Sarawak-West Kalimantan) border.

“In principle, we have agreed to this arrangement, but we must first have a formal arrangement with West Kalimantan because if there’s no regulatory procedure for us to sell LPG there, there might be smuggling activities – and we do not want that,” he said.

Meanwhile, Petros chairman Tan Sri Datuk Amar Hamid Bugo said the company, as part of its vision, would focus on efforts emphasising on safety, supply and sale of its LPG.

He added that Petros would also invest in domestic LPG production from O&G assets in Sarawak, and strive to reduce the state’s reliance on imported LPG.

Hamid also said the distribution and sale of Petros LPG products would improve fair prices to end-customers.

“It comes as no surprise that remote areas of Sarawak, those who are the least able to afford it are paying the highest price for this important cooking and heating fuel.

“Price-stacking is a challenge for us all as players in this strategic value chain, that is Sarawak oil and gas.”

For 2020, Petros has continued to supply essential gas to over 25,000 households through its piped gas grid – operated by wholly-owned subsidiary Sarawak Gas Distribution Sdn Bhd; and also to supply to over 1,500 commercial businesses and industries served by Petros’ gas distribution systems in Bintulu and Miri.