Do not equate RM2.1 billion contracts awarded by Petronas with 20% oil and gas royalty

(12-4-2015)
Adenan seems to be contented with the so-called intended awards of RM2.1 billion worth of contracts by PETRONAS to Sarawak contractors, thereby diverting the attention of the people from the initial demand for 20% oil and gas royalty for Sarawak.
Last year, in the Sarawak DUN sitting, the State Legislature unanimously passed the resolution to demand for 20% oil and gas royalty for Sarawak.
Till this day, almost a year has passed and yet it seems that the demand has hit brick-wall.
Despite the failure on the part of Sarawak government under the leadership of Adenan to execute the resolution of the Sarawak DUN, Adenan seems to be happy and contented with the award of contracts worth RM2.1 billion to Sarawak contractors.
The 20% oil and gas royalty is a far cry from the RM2.1 billion worth of contracts awarded in many ways, namely:
1. According to the 2015 Sarawak State Budget’s estimates, the 5% oil and gas royalty will give Sarawak a revenue of RM1.83 billion. Therefore, 20% oil and gas royalty will give Sarawak an additional RM5.49 billion. This is 2.5 times the RM2.1 billion mentioned.
2. “Contracts worth RM2.1 billion to Sarawak contractors” means that Sarawak contractors have to come out with RM2.1 billion worth of material and work to earn that RM2.1 billion. This is totally different from the outright RM5.49 billion cash payment as oil and gas royalty.
3. Out of the RM2.1 billion worth of contract, I am sure a very substantial portion will be paid to import materials from suppliers who are not Sarawakians or to engage consultants who are not Sarawakian. Therefore, not the whole of the RM2.1 billion will be circulating in the Sarawak economy.
4. The contracts worth RM2.1 billion will benefits the local contractors who are awarded with the contracts. Its impact on the general public in Sarawak is limited. On the other hand, the RM5.49 billion royalty payment can be used by the Government to benefit all Sarawakian, especially the poor.
5. Even if all the contracts worth RM2.1 billion were to be awarded this year, they will definitely take more than a year to complete all. Therefore, it will not be RM2.1 billion worth of contract a year. The amount will be spread over a few years. On the other hand, if the 20% oil and gas royalty were to be given to Sarawak, it would mean an additional RM5.49 billion a year.
Given the above 5 points, Adenan should not try to use the RM2.1 billion worth of contracts to cover-up his failure to obtain 20% oil and gas royalty from PUTRAJAYA. Such failure to obtain the 20% oil and gas royalty from PUTRAJAYA shows the disrespect on the part of the Federal Government towards Sarawak’s rights.
It further proves that Sarawak BN is just an insignificant appendage to the Federal BN and that Sarawak BN cannot make any important decision without the nod from the Federal BN.
In the coming DUN sitting, I will suggest some ways whereby the Sarawak Government can compel the Federal Government to give in to the demand of 20% oil and gas royalty, PROVIDED THAT the Sarawak Government must have the political will and resolve that it is not a subordinate or a colony to the Federal Government.
Chong Chieng Jen
DAP Sarawak Chairman
MP for Bandar Kuching
ADUN for Kota Sentosa