KUALA LUMPUR (Nov 4, 2009) : Prime Minister Datuk Seri Najib Abdul Razak said today "wang ehsan" (goodwill money) will be given to Kelantan from its offshore oil operations beginning next year.

"For this purpose, the federal government will negotiate with the state government to ensure a transparent implementation," he said in reply to questions on oil royalty payment for Kelantan.

"The decision to give 'wang ehsan' was made after considering the need to continue developing Kelantan and improve the condition of its people, in line with mainstream development," he said.

The MPs asked about the oil royalty payment were Salahuddin Ayub (PAS-Kubang Kerian), Datuk Kamarudin Jaffar (PAS-Tumpat), Siti Zailah Mohd Yusoff (PAS-Rantau Panjang) and Dr Mohd Hatta Ramli (PAS-Kuala Krai).

According to the law, Najib said, states like Kelantan and Terengganu were only entitled to claim royalty for petrol produced within their coastal areas.

"Coastal area is defined as areas within three nautical miles from the low water mark of the states' shores. At the moment, there are no petroleum products from the coastal areas of Kelantan and Terengganu.

"Therefore, legally, Kelantan has no right to claim oil royalty payment, the same as Terengganu," he said.

However, Najib said the federal government had previously granted "wang ehsan" to Terengganu, taking into consideration its offshore oil products, the need for development and the people's income level.

Salahuddin Ayub

He said according to Petronas, to date, there was one oil producing field in the offshore of Kelantan, called medan Bumi Selatan (South Earth platform) located at PM301 Block.

The amount of the wang ehsan, he said, will be based on the production and sale of petrol from medan Bumi Selatan and the money will be issued after detailed information on this and other related matters have been finalised.

"To ensure the people in Kelantan benefitted directly from this, the money will be channelled in the form of development projects and poverty eradication programmes in the state," said Najib who is also Finance Minister.

Opposition MPs continued to argue over the issue, saying it should be royalties and not "wang ehsan".

Najib said: "It should not matter whether it is called 'wang ehsan' or royalties as long as the government has agreed to it. You are trying to politicise this, forever politicising issues. What is important? The important thing is, we set up a fund for the people in Kelantan.

"I assure you that the people in Kelantan will benefit from it, just like the people in Terengganu," he said in reply to a supplementary question from Salahuddin.

Salahuddin said in the case of Terengganu, the payment made was based on Act 144 and was called royalties and not wang ehsan, except when the right was taken away by the federal government in 2000.

"I question your reply. We the Kelantan people were fighting for our rights. There is no question of 'wang ehsan'. Kelantanese are not beggars. Kelantanese want their rights under the constitution," he said.

This was supported by other Opposition MPs, Dr Dzulkefly Ahmad (PAS-Kuala Selangor) and Khalid Samad (PAS-Shah Alam) who stressed that the principle of justice must be recognised.

Najib then said Khalid seemed not to understand the issue as he had said he would hold negotiations with the state government.

Speaker Tan Sri Pandikar Amin Mulia then warned MPs not to simply interject without his permission, adding he would have to ask them to leave the house if they continued doing so.

"Even if you don't like it, just listen," he said while asking Siti Zailah Mohd Yusoff (PAS-Rantau Panjang) to ask her supplementary question.

She asked Najib why was the matter not considered before and what was the guarantee that it would reach the state government.

Khalid Samad

Najib said Kelantan had no right to claim the money because there were some overlapping areas, but now there was an oil producing block which could be considered.

Later, before the start of the debates, Dzulkefly stood up again to raise a standing order, suggesting for Najib to be brought before the Privileges Committee as he has misled the house.

"In the Petroleum Development Act 1974, there was no such condition, saying in order for the state to get the 5% royalties, the oil must be extracted within three nautical miles.

"In addition, according to Petronas’s financial report, the money given to Sabah, Sarawak and Terengganu is called royalties, not 'wang ehsan'," he said.

However, Pandikar Amin said there are three conditions to be fulfilled in determining whether an MP had misled the house or not – the fact given was not right, the person saying it was aware it was incorrect and the person has an intention to lie.

"All these three conditions were not met. So in my opinion, the Prime Minister did not violate any of the standing order," he said to protests from Dzulkefly, Mahfuz and M.Kulasegaran (DAP-Ipoh Barat).

Pandikar Amin then said if they were not happy with his decision, they should follow house rules and file a motion instead of continue arguing about it.

Link to Other Stories:

Nik Aziz grateful but not satisfied with 'wang ehsan' Kelantan engages panel of lawyers to look into oil royalty claim