10% OF MLNG TRAIN 9 STAKE SOLD - SARAWAK STATE’S EQUITY IN MLNG IS STATE’S PRIVILAGE AS NOT ANYBODY CAN PARTICIPATE IN THE PROJECT – TOK NAN LAST DUN WINDING-UP SPEECH.

As of today Sarawakians are still very much in the dark as to the progress and status of the negotiation of devolution of power announced  during the DUN winding speech.

Tok Nan’s winding speech on the 30^th Novermber, 2016, amongst other thing touched on the following.

DEVOLUTION OF POWER

As early as the 16th of March 2014, two weeks after To Nan was appointed as Sarawak Chief Minister, he had emphasised that Sarawak's relationship with the Federal Government must be constitutionally correct.

When  asked by the reporter from the Star, on what is Sarawak’s position with regard to Sarawak’s relationship with Kuala Lumpur and Tok Nan said that it must be constitutionally correct.

By that he meant,  in order to achieve it, the Sarawak Government at the State Legislative Assembly sitting on the 8th December 2015 had sought and was given a mandate for the State Government to safeguard the constitutional rights and protection of the State in the interest of all Sarawakians.

The mandate given covered the aspirations of the people of Sarawak from the days before the formation of Malaysia as stipulated in the Cobbold Commission Report, Inter- Governmental Committee Report and Malaysia Agreement and Malaysia Act.

Pursuant to this, the Government through its officials has actively and carefully planned a structured course of action toward achieving the following objectives.

Recently, Sarawak state Government sent its minister, officers and representative to get a closer look at the authentic documents related an agreement that lead to the formation of Malaysia.

The course of action involves three phases namely;

(a) Administrative empowerment;

(b) Encroachment of State's rights; and

(c) Oil and Gas Royalty.

On 21st January 2016, Tok Nan had announced 13 provisions of administrative empowerment to be delegated to the State Government which were agreed upon during my meeting with the Right Honourable Prime Minister.

The 13 provisions of administrative empowerment drawn by him were as follows:-

(a)            Sarawak Legal Officers are to be authorised by the Public Prosecutor under the Criminal Procedure Code to conduct prosecution for offences under the State Ordinances from the stage a person is charged in the lower court until the appeal stage. According to the Constitution, only the Federal Attorney General had the power to prosecute under any law. So he must delegate this power to State Officers. So we have now the power to prosecute under State Ordinances by our own officers.

In light of the recent Devolution of Power exercise agreed between the Federal and State Governments, several officers of the State Attorney-General's Chambers have on 1st March 2016 been appointed as Deputy Public Prosecutors.

Since then a total of sixteen (16) forest cases have been approved for prosecution. Ten (10) cases have been duly charged in Court with four (4) cases have been successfully prosecuted and the remaining six (6) cases are pending for trial. Another six (6) cases are pending for charges to be filed in Court.

Following the successful prosecutions, a total amount of RM77,719.60 in compensation was ordered by the Court to be paid to the State Government. This amount is over and above the fine imposed by the Court.

(b)    It is agreed for the Delegation of Power to the State officers to represent the Public Service Commission and the Education Service Commission in the appointment of officers to the Federal Civil Service, including teaching and medical services. This is another delegation of power by the Federal authorities to the State authorities;

(c)    Posts in Sarawak Immigration Department will be increased to improve the enforcement functions in the State with an increase of 100 new posts, with full deployment by the end of next month. As of today, out of 100 new posts, 99 posts have been filled. That means we do not have to appeal to the Federal authority every time we need a new post. We can do it on our own.

(d)    The ratio of Sarawak-born teachers serving in Sarawak will be increased to 90% of the total number of teachers in Sarawak by 2018. To ensure that this target is achieved, temporary teachers from the open market will be considered from time to time and obtain their Diploma in Education while teaching. As of today, out of the total number of 42,235 teachers in Sarawak, 37,921 of them are Sarawak-born teachers which is about 89.8% of the total number of teachers in Sarawak;

(e)    Traffic warden power for Sarawak Local Authorities will be given to the Miri City Council, apart from Kuching North City Hall and Kuching South City Council;

(f)     The Sarawak State Government will be consulted before an application for a Deep Sea Fishing Permit is forwarded to the Deep Sea Permit Evaluation Committee for consideration. The Ministry of Agriculture and Rural Economy is the representative of the State Government in the Deep Sea Permit Evaluation Committee;

(g)    The Sarawak State Government will be consulted in the drafting of Federal legislation which has bearing or impact to the Sarawak State Government, where provided by law. In this respect, the State Government was consulted for example amongst others with regard to the Integrated Water Resources Management Bill and Amendment to the Gas Supply Act 2016;

(h)    The planning of Federal development projects in Sarawak will be based on the priorities and strategic thrusts of the State Five-Year Development Plan. Implementation of the projects will be referred by the Federal Ministries to the State Government such as in determining the location of schools, hospitals and other development projects. This initiative is now being implemented;

(i)     The Higher Education Ministry will take necessary measures to increase the number of student enrolment from amongst Sarawakians with medical degree programmes in public universities. In this respect, of late I have learned that the Federal Higher Education Ministry following the steps taken for Sarawak will eventually recognise the United Examination Certificate on two conditions, the teaching of Bahasa Malaysia at SPM level and History Malaysia instead of History of some other country within the curriculum. So, this matter will be considered but we in Sarawak are the first to recognise UEC. So we hope that the Federal Government will also follow suit. Sarawakian will be given a greater opportunity to enter foundation studies programmes in UNIMAS. In this respect, UNIMAS has been empowered to manage the intake of medical students to allocate the quota of 80% for Sarawak born students;

(j)     It is agreed that relevant areas that can be delegated will be identified for delegation of power of the Director General under Section 49 of the Environmental Quality Act 1974 to the State officers or departments. Both the State and Federal Governments have agreed on the matters to be delegated and are now in an advanced stage of such empowerment;

(k)    Development of housing projects in Sarawak is to be implemented through a Joint Committee Meeting to ensure that State agencies are fully involved in the planning, implementation and monitoring aspects of these projects in Sarawak;

(l)     It is agreed that the development of sports in Sarawak is jointly managed with the State Government. The Federal Youth and Sports Ministry is also in the process of enhancing the Sports Development Act, 1997 which is expected to be completed by the end of the year. Certain aspect of the Sport Development Act, 1997 is under review by the parties to look into the possibilities of enhancing the involvement of the State Government including the organisation of international/national sporting events; and

(m)   It is agreed that the Sarawak Government will carry out all functions under the Social Welfare Department. All posts will be transferred to State Civil Service. The Federal Government will contribute 50% of the total costs incurred as decided by the National Finance Council. In this regard, the State Cabinet will be deliberating and making a decision on the terms and conditions of these initiatives in the coming months. These 13 provisions of administrative empowerment are progressively fulfilled by the Federal Government and we will continue to seek more empowerment to the State which can bring better benefits including areas related to tourism and education. The second phase involves the priorities subject matter relating to:-

(a) Finance

                (i) Financial Review under Article 112D of the Federal Constitution;

(ii) Import Duty and Excise Duty on Petroleum Products; and

(iii) Federal Financial Obligation for Expenditure in Concurrent List.

(b) Oil Exploration, Mining and Gas

(i) Minerals, Oil and Oilfields; and

(ii) Distribution of Gas.

(c)    Land and Revenue from Land Stamp Duties Chargeable on Instruments Prescribed by the Land Code for Transfer, Charge and Sublease ought to be returned to Sarawak. These issues are at an advanced stage of negotiation by the State and Federal officers in the Technical Committee set up to look into these priorities issues. Negotiations are on-going with the relevant parties. As the negotiations have yet to be finalised, the details of this meetings cannot be made public as yet. However, I wish to inform this august House that the next meeting of the Technical Committee will be held tomorrow, 1st December 2016. Matters not in the priority list will be dealt with after the issues in the priority list have been dealt with.

Tok Nan’s winding speech also include the much debated and speculated issues amongst Sarawakian and Sabahan, - “UPDATE ON THE OIL ROYALTY NEGOTIATION”

He  told the August House that the oil market has shown signs that are heading towards a more balance situation, despite continuing volatility and challenges. The World Bank’s Commodity Markets Outlook, October 2016 projected crude oil prices are to average at USD43 per barrel in 2016, a decline of 15% from the previous year (2015), and average at USD55 per barrel in 2017.

However, the forecast assumes OPEC will succeed in limiting global production, and that U.S. production will flatten out next year.

Despite the uncertainty in the oil market, the States’ negotiation on the request for the increase of oil royalty from 5% to 20% with the Federal Government and PETRONAS will continue.

Sadly, today, 242 days (2/3 of a year)  after Tok Nan’s last winding speech in the Sarawak DUN,  no conclusion has been reached on the rate of Petroleum Royalty that Sarawak State will get from Petronas is announced.

The DUN was also told that some progress in five key areas of negotiation with PETRONAS has been made namely,

(a) Natural Gas Supply for both Power and Non-Power Sectors;

(b) Equity and Royalty;

(c) Contracts and Business Opportunities;

(d) Corporate Social Responsibility; and

(e) Human Resource, Education and Technical Trainings.

On the natural gas supply, Tok Nan also announced that PETRONAS has signed five  agreements to support the development of power and petrochemical industry in the State, namely,

(a) Principle Agreement with the Government of Sarawak on the Supply of 450 million standard cubic feet per day of natural gas for the power and non-power sectors in the State of Sarawak on 3rd April 2016;

(b) Gas Sales Agreement with Sarawak Energy Berhad to supply 100 million standard cubic feet per day of natural gas for Tanjung Kidurong Power Plant on 3rd April 2016;

(c) Memorandum of Understanding with the Government of Sarawak to conduct a Joint Study for Sarawak Petrochemical Master Plan on 3rdApril 2016;

(d) Heads of Agreement with HUCHEMS for the supply of 58 million standard cubic feet per day of natural gas to HUCHEMS' petrochemical complex on 11th November 2016; and

(e) Memorandum of Understanding with Yayasan Hartanah Bumiputera Sarawak to jointly conduct a Pre-Feasibility Study for a Proposed Methanol Plant Project in Bintulu on 11th November 2016.

Through these agreements, PETRONAS has committed to supply 450 million standard cubic feet per day of natural gas to Sarawak for the power and non-power sectors development in the State.

According to him, Sarawak State will continue to negotiate for the supply of more natural gas from PETRONAS for our downstream activities.

The availability of natural gas in Sarawak will attract more petrochemical industries to invest especially in Bintulu that will support states’ industrialisation strategy to transform Bintulu to be the leading petrochemical hub in Malaysia and believe that the Sarawak Petrochemical Master Plan will also help the strate to develop its petrochemical industries in a strategic manner.

In his DUN winding speech Tok Nan also inform the members of the House that the number of Sarawak licensed of registered companies with PETRONAS have increased from 314 to 396 in 2016 and will continue to negotiate with PETRONAS to enhance the participation of Sarawak companies in oil and gas industry and pursuing to have more contracts to be given to our Sarawak companies.

In the same speech, Tok Nan said PETRONAS has committed a baseline value of RM2.1 billion worth of contracts annually to be awarded to Sarawak companies. Since 2013, PETRONAS has already spent RM14.8 billion worth of contracts for Sarawak companies.

He also told the August House that the State Government is also in active discussion with PETRONAS on the details of Shareholders Agreements on the 10% equity in the MLNG Plant Train 9.

Despite being in active discussion mode assurance on the details of Shareholders Agreements on the 10% equity in the MLNG Plant Train 9,  today no conclusive agreement had been reached but surprisingly PETRONAS on Wednesday 26 July, 2017 had reached an agreement to dispose of 10% of its shares and interest in the Bintulu MLNG Plant Train 9  for RM2.14 Billion to PTT (Thailand) on the same week it sends the first LNG delivery to the same Company which it believes was made to boost LNG market in Thailand. 

Today, if the deal is to proceed,  the share equity of the Bintulu MLNG Plant Train 9 would be :


PETRONAS         - 80%, 
JX Nippon           - 10% and 
PTT Thailand     - 10%.

There is no official announcement been made by the Sarawak State Government on the disposal of 10% equity in the Bintulu MLNG Train 9 Plant by Petronas.

I am of the opinion that the sale of  the above 10% equity in the Bintulu MLNG Train 9 Plant is not independent of the supply of LNG from the Gas field located off the coast of Bintulu, the ownership of which is the State Government of Sarawak. In such a circumstance PETRONAS should have consulted the Sarawak State Government before disposing its state to a foreign entity.

Without consultation by PETRONAS, Sarawak is merely a by stander, while equity changed hand to foreign entity that involved the States’ Bintulu LNG Assets.

By letting such action to proceed without any consultation with the State Government,  it can be construed that Sarawak Government is deemed to agree to the notion that the states’ LNG Asset that supplied the MLNG Train 9 Plant with the LNG does not belong to the Sarawak State government.

Sarawak State Government just cannot let this suspicious act to happen if it wants the state to have better involvement and economic return from its LNG Assets. What just had happened  is a regression of what Tok Nan had precisely emphasized during his last DUN winding up speech in December, 2016.

Tok Nan also said that the state is also working with PETRONAS for more equity in MLNG 2 Plant. Before the state would get any thing right, PETRONAS has just ceased the first opportunity from the state and Sarawakians at large.

He also said that the “State’s equity in MLNG projects is the state’s privilege as not anybody can participate in the projects”. This statement qualifies that no shares or involvement of other party can be tolerated as it is the state’s privilege.

The state government is not doing enough to protect the state’s right, particularly those that had been passed during the last DUN meeting. The current administration under YAB KM  Datuk Abang Johari has repeatedly on may occasions, making assurance that  he will carry on with  what Tok Nan has put in the pipeline, particularly those that involve state’s oil and gas, but what had happened during the past 242 days seems to go not in accordance to it.     

For Corporate Social Responsibility, PETRONAS is committed to spend RM50 million over 5 years from 2015 until 2019 for 10 projects.

Currently eight (8) projects have started and are ongoing namely the Development of

Community Centre,

Sarawak Regatta,

Contribution to NGOs, Mobile CSR,

Penan Pre-School,

Emergency Aids and PETRONAS Marine Conservation.

Another two (2) projects will start soon namely

PETROSAINS,

Play smart and Rest and Recreation Areas.

In the area of human resource, education and technical trainings, PETRONAS will continue to intensify education and human capital development efforts in Sarawak. PETRONAS is expected to spend RM465 million, exceeding the budget of RM420 meant for 5 years from 2015 until 2019 on:

(a) Capital expenditure for the construction of new MRSM Bintulu;

(b) Implementation of Asrama Desa projects; and

(c) Educational sponsors and building capacity for students.

The following are PETRONAS contribution in education and human capital development:

(a) 680 students sponsored under PETRONAS Education Sponsorship Program to pursue tertiary education in 2003;

(b) 1,054 students sponsored under Program Sentuhan Ilmu PETRONAS to drive academic excellence;

(c) 1,008 trainees given the technical skill training support under PETRONAS VISTA;

(d) 47 students participated in Graduate Employment;

(e) 687 students graduated from University Teknologi;

(f) 1,945 trainees sponsored at Institut Teknologi Petroleum; and

(g) 95 students sponsored at Akademi Laut Malaysia.

Currently there are 3,880 Sarawakians or 75% of the total workforce being employed by PETRONAS for its Sarawak operation covering both upstream and downstream including senior positions.

However, after our negotiation with PETRONAS to increase the number of Sarawakians working with PETRONAS, they have charted a Roadmap to recruit and develop more Sarawakians to achieve the targeted job level of 85% for Sarawakians by 2020.

The Localisation Plan was developed to increase the numbers of qualified Sarawakians in PETRONAS through Structured Succession Planning and New Recruitment through advertisement.

The Structured Succession Planning of Sarawakians filling up positions on Non-Sarawakians is on-going since September 2016. For the new recruitment, 192 vacancies (meant for Sarawakians) were advertised in the local papers

Utusan Borneo, Borneo Post and New Sarawak Tribune etc

As of 8th November, PETRONAS has received 10,000 applications (including non-Sarawakians) and shortlisting is in process.

Efforts are also in place to further up skill and create future qualified Sarawakians leaders.

Placement of Sarawakians at Universiti Teknologi PETRONAS and Institut Teknologi Program PETRONAS will continue to be done based on merit.

PETRONAS will continue to expand outreach programme to encourage more Sarawakian students to enrol in the University.

PETRONAS will also continue to support technical training programmes in Sarawak via PETRONAS Vocational Institution Sponsorship and Training Assistance Programme which include the funding of technical programmes, consumable and Training of Trainers as well as sponsorship of trainees.”

The current state administration MUST make official public statement and or announcement as to what extent the state government and the Federal government and PETRONAS has delivered, achieved eversince Tok Nan’s  last announced in the September 30^th  2016 DUN sitting.