Extra RM2.4b for Sabah from now
Published on: Monday, October 17, 2022
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Hajiji also confirmed the State Government’s proposal to establish a Universiti Teknologi Petronas (UTP) branch in Sabah with the signing of a Memorandum of Understanding (MoU) between UTP and University College Sabah Foundation (UCSF), which would further boost Sabah’s human capital development and the ability to support the O&G sector in line with the Sabah Maju Jaya vision.
THE State Government is expected to continuously collect about RM2.45 billion per year in royalties and State Sales Tax (SST) payments from oil and gas (O&G), following the inclusion of Petrochemicals (PetChem) in the SST Enactment recently, said Chief Minister Datuk Seri Hajiji Noor.Nevertheless, the amount would depend on global oil prices. Following the inclusion of PetChem in the SST Enactment, Petronas Chemicals made an additional contribution of RM10 million for August to the Sabah SST collection for its Samur operations in the Sipitang Oil & Gas Industrial Park (Sogip).
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He also confirmed that Hibiscus Petroleum has cleared all outstanding SST payments.
“We hope to develop and expand business with all O&G companies in a harmonious partnership environment,” he said at the signing of the Natural Gas Supply Agreement and document exchange of Asset Sale and Business Agreement between Petronas and Sabah Energy Corporation Sdn Bhd (SEC) at the Sabah International Convention Centre (SICC) in Kota Kinabalu on Oct 11. His speech was read by State Local Government and Housing Minister cum Finance Minister II, Datuk Seri Masidi Manjun.
Hajiji also confirmed the State Government’s proposal to establish a Universiti Teknologi Petronas (UTP) branch in Sabah with the signing of a Memorandum of Understanding (MoU) between UTP and University College Sabah Foundation (UCSF), which would further boost Sabah’s human capital development and the ability to support the O&G sector in line with the Sabah Maju Jaya vision.
“I feel very proud of this progress and development. The State Government thanked the Federal Government and Petronas for showing commitment and always listening to Sabah’s demands on the O&G industry.
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“It opens up more room for cooperation between the State Government and Petronas to ensure Sabah and its people get the best,” said Hajiji.
Meanwhile, State-owned Sabah Energy Corporation Sdn Bhd (SEC) is now the largest supplier and transporter of domestic natural gas in Sabah, as well as one of the main players in the industry in Malaysia.
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Hajiji said with the Petronas gas contract in Sabah, SEC has become the largest domestic supplier involved in transferring more than 250 MMscfd (million standard cubic feet per day) of natural gas to existing Independent Power Producers (IPP).
With a larger customer base and infrastructure control, SEC is ready to further expand its gas business in Sabah, in line with the State Government’s aspiration to see increased participation of the state GICs (Government-Interest Companies) in the industry.
“SEC as one of the main players is in line with Sabah Maju Jaya’s aspirations to advance the O&G industry in Sabah.
“Thus, the State Government is very pleased with the signing of various gas agreements with Petronas because it supports the growth of the downstream industry in the state,” he said.
The signing of the Natural Gas Supply Agreement and the exchange of Asset Sale and Business Agreement documents marked another important achievement for Sabah after the signing of the Commercial Collaboration Agreement (CCA) between the State Government and Petronas on Dec. 7, 2021.
“Indeed, this is another proof of the success of the Gabungan Rakyat Sabah-Barisan Nasional (GRS-BN) State Government in establishing good relations with the Federal Government and Petronas, in an ecosystem that complements each other and enables us to enjoy shared prosperity.
“Starting from the signing of the Heads of Agreement (HOA) between SEC and Petronas for the supply of natural gas amounting to 120 MMscfd which has been achieved previously, the Gas Supply Agreement (GSA) will give the Sabah State Government an opportunity through SEC to lead in natural gas marketing and distribution activities to attract domestic and international investment.
“SEC will play a major role in increasing the use of natural gas for use in the manufacturing and energy industries through the natural gas pipeline that will be taken over from Petronas starting Jan. 1, 2023,” stressed Hajiji.
He said through the collaborative effort, SEC would own and operate the main downstream natural gas infrastructure in Sabah.
With the acquisition of the natural gas business owned by Petronas, SEC would supply 86 per cent of fuel for power generation in the State.
With this, he said, the State Government through the SEC would be able to move forward in exploring the full potential of the State’s natural gas industry chain which will certainly provide good economic returns to Sabah, thus enabling Sabah to obtain not only greater revenue sharing but also participation and greater dominance in matters of O&G.
Hajiji said energy sources based on natural gas are cleaner and more competitive than traditional sources such as diesel and Liquefied Petroleum Gas (LPG).
He hoped industry players in Sabah would benefit through cheaper energy prices to help reduce the cost of doing business in the State.
Through natural gas, the State Government would also be able to reduce the rate of carbon emissions in the air to achieve net zero carbon emissions in 2050.
“It is my aspiration for Sabah to legally place its demands and chart a path that benefits the people and future generations.
“We will continue to strive for equitable development. Going forward, the State Government will focus on what needs to be done to identify and develop more infrastructure for future investment, to create more opportunities and development for Sabahans. This will be done through collaboration with the Federal Government, Petronas and high-value investors,” he stressed.
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