Published: Wednesday November 4, 2009 MYT 10:37:00 AM
Updated: Wednesday November 4, 2009 MYT 1:05:42 PM

Parliament: Compassionate payment for Kelantan for its oil (Update 2)

By YENG AI CHUN

KUALA LUMPUR: The Federal Government will pay a compassionate fund (wang ehsan) to Kelantan for oil extracted from the state’s waters, Prime Minister Datuk Seri Najib Tun Razak told the Dewan Rakyat on Wednesday.

He said the payment, which would be in the form of development programmes for the state and its poor, would begin next year.

“The allotment of wang ehsan to Kelantan would take into consideration the production and sale of petroleum from the Bumi Selatan field.

“The allotment would be channeled after a detailed report about the sum of gas produced and the procedure is finalised.

“The first allocation of wang ehsan for Kelantan is expected in 2010,” he said during the question and answer session.

Salahuddin Ayub (PAS-Kubang Kerian) had asked Najib when Petronas Bhd would pay the oil royalty claims by the Kelantan state government.

Najib said in order for the allocation to be beneficial to all Kelantanese, the money would be channeled in the form of programmes for development and to combat poverty.

“The projects would be carried out by the Federal Government after negotiating with the state government.

“This decision reflects the Federal Government’s commitment to ensuring that people from all walks of life enjoy the benefits of the country’s development,” he said.

Najib claimed that from a legal aspect, states such as Terengganu and Kelantan are only entitled to oil royalties if the petroleum is drilled from its waters.

“The offshore oil operations in their waters are defined as an area not more than three nautical miles, which is measured starting from the low watermark or the shoreline of the state.

“Currently, there is no oil production in the waters of Kelantan or Terengganu. Because of that, from the legal standpoint, Kelantan does not have a right to demand oil royalties, the same as Terengganu,” he said.

He stated that even though the law is clear, the Federal Government has allocated wang ehsan to Terengganu by taking into consideration the production of petroleum located off its waters.

“Because of that, Kelantan deserves the same consideration if there are offshore oil activities outside the boundaries of its waters,” he said.

More to come