Oil and gas, among others, have become the mother of all political hot potatoes in Sabah and Sarawak, especially among the more nationalist-minded young, and especially following huge recent discoveries of the two commodities in local waters and in their sizeable portion of the adjacent Spratly Islands. The result has been that the one-sided oil agreement evidently signed under extreme duress in 1976 between the federal government/Petronas and the Sabah and Sarawak state governments has come under increasing public scrutiny.
The two states at present get only five percent royalty for oil and gas produced in the inner waters where the number of wells is comparatively fewer and increasingly drying, if not dried out, and none for the outer waters.
The opposition alliance, Pakatan Rakyat, has publicly pledged that it will increase the oil royalty to 20 percent when, not if, it seizes the reins of power in Putrajaya during elections expected between May this year and next May. The five-year term of the present Parliament ends in April/May next year.
Pakatan has so far not clarified whether the 20 percent pledge covers the outer waters.
It’s unlikely that the Peninsular Malaysia-based national opposition coalition will agree to fork out royalty for the outer waters. This means the Pakatan pledge is as good as meaningless, more hype than substance, favouring form over real reforms.
Local hero Jeffrey Kitingan meanwhile is demanding a blanket 50 percent oil royalty.
Jeffrey’s State Reform Party (STAR), a Borneo-based national party, has already put together an oil and gas master plan.
Maximum benefits
The Jeffrey Kitingan Master Plan aims to wrest maximum benefits from energy resources for the two states through upstream and downstream diversification and backward and forward integration of hydrocarbon and other energy resources.
Likewise, the opposition Sabah Progressive Party (SAPP) is also counting its chickens before they are hatched.
The party claims it has plans to develop the local oil and gas sector in Sabah but this hinges, according to insiders, on the state collecting the 20 percent royalty pledged by Pakatan. The party does not know whether the revised royalty from Pakatan covers the outer waters. So much for wishful thinking and living on the hope that “some nice things will happen one day”, as articulated by Jeffrey in one of his books.
Some in the younger generation in the two states favour taking a leaf from the oil-producing provinces in neighbouring Indonesia. Here, Jakarta takes only 30 percent.
Others point at the Muslim republics in the Russian Federation which get to keep all the proceeds from their oil and gas resources.
The most radical position on the oil and gas question has been adopted by a proposed new NGO, Oil for Future Foundation of Borneo (OFF), being mooted by STAR vice-president Phillip Among.
The foundation, in the process of being registered, will use “Our Oil, Our Future” as “the new battle-cry for Sabah and Sarawak to bring about real reforms and make a difference for the better for the two poorest states in Malaysia”. Phillip wants more than the 70 percent oil royalty being demanded by his other young compatriots.
He agrees that the 70 percent oil royalty should be backdated to 1976 and a statutory 8 percent interest per annum be paid, compounded annually, on the arrears.
Phillip is enough of a realist to think that Putrajaya will not play ball on the oil royalty issue.
Massive new headache
For starters, Putrajaya will go broke paying out the massive arrears being demanded, and that’s assuming it accepts the proposed new oil royalty of 70 percent. Also, much of the oil billions virtually plundered from Sabah and Sarawak over nearly four decades has either been squandered away by prolific spending habits in Putrajaya, politics or disappeared into private pockets mostly in Peninsular Malaysia.
Phillip favours his proposed new foundation placing the issue of the oil and gas resources of Sabah and Sarawak before the UN Security Council for a determination by the international community.
Already, he has invited London-based Hindraf Makkal Sakthi chairman P Waythamoorthy to be OFF’s international adviser. Waythamoorthy, also the chairman of the newly set up UK-based Human Rights Foundation of Malaysia, is expected to help prepare OFF’s application for the UN Security Council.
Waythamoorthy has previously been quoted as saying in the London media that he favours Sabah and Sarawak leaving the Malaysian Federation under UN supervision.
The Hindraf chief has cited Putrajaya’s non-compliance of the 1963 Malaysia Agreement, under which Sabah and Sarawak agreed to help form Malaysia, as the major reason.
Phillip points out that the Malaysia Agreement is one of the issues in Jeffrey’s Borneo Agenda being flogged by the United Borneo Front (UBF), the NGO, and the United Borneo Alliance (UBA), a coalition of like-minded local political parties.
He prefers to look beyond “flogging the dead horse of the Malaysia Agreement” and/or living in the past. He prefers to look to the UN Security Council under OFF’s Beyond Borneo Agenda, but this isn’t a dig at Jeffrey’s Borneo Agenda, he quickly clarifies.
Hence, the emerging new political undercurrents in Malaysian Borneo has all the hallmarks of Timor Leste, Acheh, South Sudan, Darfur, South Kordofan and the oil belt in Nigeria all rolled into one, and which presents a massive new headache for Putrajaya, still reeling from the effects of the political tsunami of 2008 which robbed it of the richest states in Malaysia.
Many oil nationalists in Kota Kinabalu and Kuching even think that the oil-and-gas rich Sulu Islands, once linked not so long ago with the eastern and northern seaboards of Sabah, should be included as well in a new political equation in the region. This is not expected to go down that well in Manila or in the Autonomous Region of Muslim Mindanao.
Indeed, the talk in the political grapevine in London is that a new report by regional operatives of the Central Intelligence Agency (CIA) also favours the oil and gas question in Sabah, Sarawak, the Spratly islands and the Sulu islands being brought before the UN Security Council for an open debate.
Global energy security, following the Arab Spring and Iran nuclear crisis, is being cited as the major reason.
The CIA had previously focused all its reporting in the region on the Spratly Islands and the Sulu Islands.
Sabah and Sarawak may be the new pre-occupation of the CIA following concerns expressed in Washington on on-going developments in the Spratly islands which have seen stand-offs between the Chinese and Philippine navies.
Joe Fernandez | February 5, 2012
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