Ministry: Petronas need not pay out cash to east coast states

Ministry: Petronas need not pay out cash to east coast states

KUALA LUMPUR- Petronas is not legally bound to make cash payments for petroleum to any of the peninsula's east coast states.

This is because no oil has been found in the territory of either Kelantan, Pahang or Terengganu, the oil corporation said in a statement issued by the Finance Ministry yesterday.

"This was based on the term 'in the state' in the Settlement Agreements which refers to state land and state territorial waters of not more than three nautical miles measured from the low-water line offshore the state coastline," the statement added.

"This definition is is based on international and domestic laws," it added.

The ministry said under the Settlement Agreements the oil corporation signed with the three states, they receive only 5 per cent of the value of the petroleum discovered in their territories and produced by Petronas.

These were among the findings of the Special Committee to Determine Cash Payments From Petroleum in the East Coast of Peninsular Malaysia released by the ministry yesterday.

The statement said this was to enlighten the rakyat and prevent them from being fed with misleading information over the claim.

"This has to be done to protect national interests, so that the rakyat could understand the Government's stand," the statement said.

The committee had briefed the Cabinet on its findings in August last year.

The statement said that the Special Committee was given the mandate to decide on two main issues, namely to identify if there was any state in the east coast of peninsular Malaysia which had a legal right to receive cash payments from petroleum revenues, and if so, to decide on the formula and method of payment.

The statement said that despite the committee's findings, the matter was still being contested in court with the Kelantan state government having filed a legal suit to claim a share of petroleum revenues.

"As such, any decision or outcome of the study made by the Special Committee should not be seen as influencing any court decision on the case," the statement said.

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