He said the government was not breaking its election promise as the 20% oil royalty would be based on cash payments of nett profit and not the gross revenue.
Azmin said the payment referred to in Section 4 of the Petroleum Development Act 1974 (PDA) uses the word cash payment, not oil royalty.
However, opposition MPs referred to the Pakatan Harapan manifesto which states “royalty and not cash payments” and asked if the PH government was now breaking its election promise.
Azmin faced heated questions from PAS and Sarawak MPs due to the perceived change in interpretation of the manifesto promise.
Mustapa Mohamed (BN-Jeli) asked if the 20% promised during the election campaign was over and above the present 5% royalty given by Petronas to oil-producing states.
Azmin said a Cabinet committee had been formed to discuss all the issues.
He said he had discussed with one of the states on the cash payment and “they are quite happy with our offers and similar engagements will be held with others states”.
Some of the PAS MPs also asked if the 20% promise was made without research to lure voters to vote for PH in the May 9 general election.
Azmin, who is Gombak MP, said PH had reviewed the increase in royalties to oil-producing states based on “distributive justice”.
“According to our understanding, PH will increase the oil royalty to 20%. This is based on the profits and not gross production.”
At the moment, the royalty paid by Petronas was 10%, divided equally between the federal and the oil-producing state governments. This 10% is calculated based on the gross value per barrel at market rate.
Azmin said the 20% royalty cannot be carried out immediately as it was against the PDA.
He said the government planned to set up a committee consisting of representatives from the peninsula, Sabah and Sarawak to review the act and the Sarawak Oil Ordinance 1958.
20% oil royalty on profit, so wait for amendments to law, says Putrajaya