Royalty can wait, fiscal health more important

In Sarawak, it appears state patriotism trumps economics and common sense. Economists from across the government and private sector are saying the  government should restore its fiscal health and weigh the implications on Petroliam Nasional Bhd’s (Petronas) balance sheet first before fulfilling the request of oil-producing states for an increase in royalty payments.

Petronas is already burdened with the RM30 billion extra dividend (which goes to all states) to worry about additional royalty payments. According to Sunway University Business School Professor of Economics Dr Yeah Kim Leng royalty payments can wait another two to three years. He highlighted that a higher royalty payment will jeopardise Petronas’ balance sheet and reduce its capacity to refund services tax and income tax refunds. This could have a knock on effect on companies which need cash flow to run their businesses.

All businesses get the refund even those from Sarawak and other oil producing states and unless the states have got a clear cut plan on what to do with the additional royalty payments, these can wait.

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IOCs starting to move out of Sarawak

The ongoing politics in Sarawak’s oil and gas sector is heating up. The challenge to Petronas for licensing rights of oil and gas fields and the imposition of a 5% tax on fuel product exports is starting to have its effect.

Murphy Oil one of the largest international oil companies in Sarawak has decided to exit disposing its majority interests in eight separate offshore production sharing contracts in Malaysia joining Shell who sold off one of their downstream investments in Sarawak.

For other International Oil Companies (IOCs) already operating in Sarawak, the proposed sales tax staring 1st January 2019 will be a bitter pill to swallow and will put the breaks on the previously anticipated 25% hydrocarbon output growth in the coming years. This could mean less new jobs, less new investments and less new players in the market.

The assurance from Chief Minister Datuk Patinggi Abang Johari Tun Openg Sarawakians will not be affected by the tax somehow rings hollow.

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RM40 power bill rebate for 185,000 poor households from Jan

The government has allocated RM80mil for monthly electricity bill rebate of RM40 each for 185,000 poor and hardcore poor households registered and verified under the e-Kasih system effective Jan 1.

In a statement, the Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC) said under the targeted aid programme, the eligible households would get free usage of electricity up to RM40 monthly, depending on their current usage.

“If the monthly usage is under RM40, the household head will automatically get free electricity based on the actual bill. However, if the usage exceeds RM40, the household head needs to pay only the balance after deducting the rebate of RM40,” it said.

The ministry said the RM40 Electricity Bill Rebate Programme was a new scheme introduced, taking effect from Jan 1 to Dec 31, 2019, to replace the RM20 Electricty Bill Rebate Programme which was ending this December.

The rebate programme is in line with the government’s aim of caring for the people’s welfare and quality of life, as stated in Budget 2019 tabled last Nov 2.

Consumers can check their e-Kasih and rebate eligibility at the MESTECC portal, https://semakanrebat.mestecc.gov.my or by calling the My Government Call Centre (MyGCC) at 03-8000 8000.

They can also check for eligibility by calling the Tenaga Nasional Bhd (TNB) careline 1-300-88-5454 or directly at the nearest Kedai Tenaga.

Consumers in Sabah can call the Sabah Electricity Sdn Bhd (SESB) helpline 088-515000/15454 while in Sarawak, consumers can call the Sarawak Energy Berhad (SEB) customer careline 1-300-88-3111.

Meanwhile, eligible e-Kasih users who do not have a registered account with TNB, SESB or SEB can apply for a third party account by filling the application form at any nearest Kedai Tenaga TNB, SESB office or SEB office and attach a copy of their identity card as a support document.

Consumers who do not quality after verification has been made but wish to register in the e-Kasih programme can refer to the state’s Federal Development Office (PPPN) or Federal Development Department (JPP), Implementation Coordination Unit, Prime Minister’s Department, or the District Office’s Development Unit. – Bernama

Source: The Star

Sarawak invests into Petronas, despite setting up Petros

The Sarawak government has received almost RM20 billion in accumulated dividends up to February 2018 from its investment in three Malaysia Liquefied Natural Gas (MLNG) plants in Bintulu through investments in Petronas subsidiaries (plants) located at the Petronas Complex. Confident with the returns the state government bought a 10% stake in the Train 9 plant and increased its stake in MLNG Tiga from 10% to 25%.

Source: kamekmiaksarawak.com

Following this latest agreement, the state government will now have interest in all four of the LNG assets in the Petronas LNG Complex in Bintulu. The state already owns a 5% stake in MLNG Satu Sdn Bhd, and a 10% stake each in MLNG Dua Sdn Bhd and MLNG Tiga Sdn Bhd.

The Sarawak patriots will turn around and say, why be satisfied with 25% why not go for 100% without knowing anything about the LNG business. In fact, Petronas already had a 60% stake in MLNG Tiga, and agreed not to exercise its preemptive rights to buy the 15% stake held by Royal Dutch Shell, instead supporting the acquisition by the state government.

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Sarawak gets RM250 mln federal fund for flood mitigation programme

The federal government has approved funding of RM250 million for the flood mitigation programme in Sarawak.

According to a statement from the Local Government and Housing Ministry issued, this came after a meeting between Minister of Local Government and Housing Sarawak Datuk Dr Sim Kui Hian and the federal Minister of Land, Water and Natural Resources Dr Xavier Jayakumar in Putrajaya earlier this month.

Dr Sim was joined by Batu Lintang assemblyman See Chee How, Drainage and Irrigation (DID) Sarawak director Chok Moi Soon and Sewerage Services Department Sarawak director Lau Hian Ung during the courtesy call on Xavier at Wisma Sumber Asli in Putrajaya.

It is learnt that drainage and irrigation are among projects under concurrent Federal-State Joint Funding list.

Under the 11th Malaysia Plan (2016-2020), DID Sarawak requested for RM4.58 billion to handle four main programmes, of which RM608.7 million (or 13 per cent) had been approved.

It is reported that the approved projects for Sarawak included flood mitigation for Kuching and Sibu.

Source: Borneo Post Online

Sarawak set to achieve 97% electricity coverage by 2020

Sarawak is well on its way to achieve 97 per cent electricity coverage by 2020 with the RM2.37 billion special allocation in the State Budget 2019.

In pointing this out, Assistant Minister of Rural Electricity Datuk Dr Abdul Rahman Junaidi said the electricity coverage in Sarawak currently stood at 91 per cent.

“About nine per cent or 30,400 households in rural areas still have no access to 24-hour power supply. Our target is to achieve 100 per cent electricity coverage by the year 2025.

“With the RM2.37 billion special allocation announced (last month) by the Chief Minister, we will be able to increase the electricity coverage from 91 to 97 per cent by 2020,” he said before performing the earth-breaking for a Rural Electrification Scheme (RES) project in Kpg Ulu Sungai Sinjan at Jalan Layang-Layang in Petra Jaya here yesterday.

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3 Reasons Why Sarawak Needs the 5% Petroleum Sales Tax

A walk down the passage of time, specifically over the last 10 years or so, brings about some surprising findings. For those of you needing a history lesson read on, here’s my take to the 3 incidents that “forced” the GPS government to impose the 5% sales tax on petroleum products out of Sarawak.

1.Between 2006 and 2008,  Taib’s family controlled Utama Banking Group, spending RM1.35 billion on acquisitions that never bore any fruit. This included:-

  • a 49% stake in Putrajaya Perdana Berhad for RM332 million and a further 51% stake for RM343 million 
  • a 45% stake in Loh and Loh Corp Bhd for RM124 million and a further 51% stake for RM205 million 
  • Unity Capital Partners for RM350 million
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Is the 5% Petroleum Sales Tax Sarawak’s GST?

It looks like Sarawak is copying revenue generating strategies from the previous BN government. The reason given by the now kicked out BN government to impose GST was to increase government revenue. We know that the money collected was being used to plug the debt incurred by 1MDB to line the pockets of those put in charge of 1MDB.

Realising that they would never be able to impose another consumer tax on its people without Federal Government approval, the Sarawak state government has decided to slap the 5% petroleum tax on all petroleum products produced in the state beginning January 1st 2019.

Pic: Fantasy banknotes sold by Yuri Minkin, produced by French graphic artist, Franck Medina

Calling it a master stroke that would raise close to RM4 billion for the state.  Sarawak’s Chief Minister did not in any way outline how the New Year’s Day gift to oil producers was going to help the average Sarawakian on the street apart from saying that the money will support the state in its undertakings on major development programmes and projects. This sounds very familiar to the reason why the 6% GST was levied on all Malaysians on 1st April 2015. A very bad April Fool’s joke which benefitted a select group of leaders and their relatives who are now facing a slew of criminal charges.

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Sarawak Energy-Shell sign MoU to explore green tech

State-owned power provider Sarawak Energy Berhad (SEB) today signed a Memorandum of Understanding (MoU) with Shell MDS (Malaysia) Sdn Bhd (SMDS) to explore green technology for Sarawak.

Under the MoU, both will work together in assessing potential opportunities in lower cost hydrogen production technology via electrolysis.

The MoU also includes a joint study and knowledge exchange on hydrogen production technology, education and drawing up best practices as well as assessing opportunities for green certification in hydrogen production.

SEB group chief executive officer Datuk Sharbini Suhaili said the MoU follows the construction of SEB’s pilot hydrogen production plant and refuelling station scheduled to be ready in time for a test run of three hydrogen-powered buses due to arrive here by the first quarter of next year.

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