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Sarawak government, Petronas reach agreement on oil and gas management

KUALA LUMPUR: The Sarawak state government and Petroliam Nasional Bhd (Petronas) jointly announced today they have reached an agreement on oil and gas (O&G) management in the state as well as the sales tax on petroleum products.

The statement was issued by Sarawak Assistant Minister of Law, State and Federal Relations and Project Monitoring Datuk Sharifah Hasidah Sayeed Aman Ghazali and Petronas chairman Datuk Ahmad Nizam Salleh.

They said both parties agreed that the best approach in reaching an amicable solution was through a commercial settlement to create a stable business and investment environment.

In this regard, Petronas has agreed to withdraw its appeal against the decision by the Sarawak High Court in relation to a judicial review request dated March 13 and, in return, the Sarawak government will drop all claims in its civil case against Petronas for the payment of petroleum products sales tax.

The statement said Petronas, via its subsidiaries involved, would be paying in full the petroleum products sales tax imposed by Sarawak for the year 2019 amounting to RM2 billion, which is five per cent of the products’ sales value.

The two parties have further agreed that future petroleum products sales tax would be reduced and staggered based on future negotiations, under the State Sales Tax (Taxable Goods and Rate of Tax)(Amendment)(No 2) Order, 2018.

“The Sarawak sate government also agrees that the sales tax will be limited to petroleum products stipulated under Order 2018; however, all agreements between Sarawak and Petronas under the Petroleum Development Act 1974 are still valid and in effect.

“This includes collaborative opportunities at the operational level in Sarawak,” the statement said.

It added that to ensure the implementation of the commercial resolution, the Senior Minister (Works) and Finance Minister would be tasked with chairing a joint committee for this purpose.


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