KUCHING: Petroliam Nasional Berhad (Petronas) had to give in to Sarawak’s demands so as not to muddy the waters any further, Universiti Malaya political analyst Dr Awang Azman Awang Pawi said.
He said Petronas, as the nation’s oil and gas company, was the only Malaysian company in Forbes’ list of 500 best companies and it did not reflect well on their reputation to be embroiled in a lengthy legal tussle.
“Petronas has failed in its application for a stay in the State Sales Tax (SST) on petroleum products for 2019. In this context, Petronas saw that a lot of things would side with the Sarawak state government.
“If the case dragged on, then it would not be of any benefit for either side,” he said in a statement on Sunday (June 7).
Dr Awang Azman said a discussion with Sarawak was the best move for Petronas which saw the cancellation of its Court appeal which was scheduled for June 17 following its agreement to pay RM2 billion in SST to the state government.
“The move by Petronas to pay the SST is recognition for the demands of Sarawak as well as the state constitution which provides the basis for the SST claim,” he said.
He added that on the legal aspect of the agreement, Petronas’ retraction of its appeal showed the corporation concurring with the High Court’s previous decision.
“In this, it is clear that Sarawak’s rights over oil and gas as well as its waters are being protected under the Federal Constitution.
“This is also in accordance with the Malaysia Agreement 1963 (MA63) and the Inter-Governmental Committee (IGC) Report 1962 as the basis for the efforts to defend Sarawak’s rights.
“Therefore, there is no issue of the state government being weak when it accepted the RM2 billion from Petronas to settle the five per cent SST outside of a court settlement,” he said.
Last month, Petronas and Sarawak reached an agreement to bury the hatchet and opted to work together, ending months of legal battle over SST.
This, however, caused some parties to think that Sarawak yielded to Petronas because its case against the corporation was “weak”.