KUCHING, Feb 14 — Prime Minister Datuk Seri Anwar Ibrahim has been urged to use his absolute powers under the Petroleum Development Act (PDA) 1974 to correct the imbalances in regard to Sarawak’s on oil and gas (O&G) rights.

This is because Sarawak’s pre-Malaysia Oil Mining Ordinance (OMO) 1958 is still valid and applicable, said Puncak Borneo MP Datuk Willie Mongin.

During his debate on the motion of thanks for the Royal Address in Parliament yesterday, Willie appealed to the prime minister to invoke his absolute power under the PDA 1974 over Petroliam Nasional Berhad (Petronas) in terms of control and direction.

“Use such power to correct the imbalances, uphold justice, and defend the rights that should have been given,” he stressed.

The Parti Pesaka Bumiputera Bersatu (PBB) member stated that O&G activities in Sarawak are state rights and should not be fully controlled by the federal government even via the PDA 1974.

He also raised the question of the validity of PDA 1974 after the repeal of the Emergency Ordinance (EO) 1969 in 2011.

“The PDA 1974 was implemented while the EO 1969 was still in force, making it valid in Sarawak without having to be formally adopted.

“But when the EO 1969 was repealed, the PDA 1974 should have automatically been repealed in Sarawak and Sabah,” he pointed out.

He urged the federal government to be fair to Sarawak and ensure that injustices are discontinued.

He also questioned the legal basis used to revoke the state’s constitutional authority in regard to gas distribution.

“Sarawak is not demanding for the entire oil and gas revenue, but only fair rights for the state. Sarawakians want a fair solution and a win-win situation for mutual prosperity,” he said.

Willie said he supported the Sarawak government’s proposal to reorganise the roles of Petronas and that of Petroleum Sarawak Berhad (Petros) involving the state’s gas sector, which include upstream activities, namely gas production.

This would mean gas production is handled by Petronas, whereas Petros acts as the sole aggregator for domestic gas procurement, distribution, and supply.

The downstream sector, namely the production, sale, and export of liquefied natural gas (LNG) would be handled by Petronas.

Willie said under this framework, the PDA 1974 and the Gas Distribution Ordinance (DGO) 2016 (Amended 2023) can coexist without undermining any party.

According to him, the narrative Petronas will lose its entire business in Sarawak is untrue.

He pointed out the imbalance in gas distribution in Malaysia, where 94 per cent of the total 4.5 billion standard cubic feet per day of natural gas production in Sarawak is exported abroad by Petronas, while only six billion standard cubic feet is used for the energy, industrial, and domestic sectors in Sarawak.

This contrasts with Peninsular Malaysia, where the two billion standard cubic feet per day of natural gas produced is used entirely for domestic use, said Willie.

“Is this fair for Sarawak? Why can’t Petros manage a portion of this 94 per cent to increase domestic gas usage? If it can, this would strengthen downstream industries, boost Sarawak’s economy, create more jobs, and generate more tax revenue for the country.”

Willie said the federal concept, which forms the foundation of Malaysia’s establishment and the core of national administration, must be respected by all parties.

The Malaysia Agreement 1963 (MA63), which is the basis of Malaysia’s formation, must be honoured and implemented, he stressed.

He pointed out the Inter-Governmental Committee (IGC) Report recommended that federal authority over electricity and gas be transferred to Sarawak and Sabah, granting the Borneo states legislative powers over electricity and gas distribution.

This recommendation was implemented under Article VIII of MA63, giving Sabah and Sarawak legislative authority in 1963 to expand their legislative jurisdiction to include electricity and gas distribution, he said.

Based on this authority, he said the Sarawak State Legislative Assembly passed the DGO in 2016, which was later amended in 2023, allowing the Sarawak Cabinet to appoint Petros as the sole aggregator for gas in the state.

“Sarawak has never agreed that Petros should only be a gas aggregator for non-LNG businesses, nor has Sarawak ever agreed that Petros does not have the right to distribute and supply natural gas to LNG plants.

“Moreover, Petronas is not exempt from complying with other written laws, including state laws, under the PDA. In the case of Petronas vs the Sarawak State Sales Tax (SST) Controller and the Sarawak Government, the High Court ruled that Petronas is not exempt under PDA from complying with other laws, including State laws.

“This is why Petronas was required to pay Sarawak’s SST under the State Sales Tax Ordinance and has been paying it since 2019,” he said.

He stressed Petronas must also comply with the DGO to distribute and supply gas in Sarawak.

“However, the Sarawak government is willing to consider licensing exemptions for Petronas for activities unrelated to gas distribution and supply since those activities will be carried out solely by Petros as the sole aggregator,” he said.

During MA63 discussions, he said it was agreed that Sections 6 (1) and (3) of PDA 1974, which require businesses engaged in gas marketing and distribution to obtain approval from the Prime Minister, would not apply to Sarawak.

This led to then Prime Minister Tun Dr Mahathir Mohamad signing an Exemption Order (Amendment) Notification in 2019, he said.

“With this Exemption Order, the law governing gas distribution in Sarawak is the DGO, not the PDA,” he added. — The Borneo Post