What is the difference in royalty understanding between Sabah and federal?

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Sabah and Federal Governments Differ on Oil Royalty Calculation Basis

The Sabah government is pursuing a 20 per cent oil royalty claim, which it seeks to clarify with the federal government. This claim is understood by Sabah to be "based on royalty," a phrasing that differs from the federal government's interpretation, which cites the Petroleum Development Act 1974. The federal government, through Economic Affairs Minister Datuk Seri Mohamed Azmin Ali, has stated that the royalty is calculated based on gross profit, not net profit, and this stipulation prevents the immediate expedition of Sabah's request.
Sabah's Royalty Claim Basis

Sabah's Chief Minister Datuk Seri Mohd Shafie Apdal has indicated that the state's understanding of the 20 per cent oil royalty is "based on royalty." He has also alluded to a potential calculation involving a "five plus 15" scenario, suggesting that the state's interpretation might differ from the current federal framework. The Sabah government intends to establish a dedicated body to refine discussions with the federal administration on this specific matter.
Federal Government's Stance on Royalty Calculation

The federal government's position, as articulated by Minister Datuk Seri Mohamed Azmin Ali, centres on the provisions of the Petroleum Development Act 1974. This Act mandates that oil royalty is computed on a gross profit basis. This distinction is crucial, as it implies a different calculation method than what Sabah might be envisioning with its "based on royalty" assertion.
Discrepancy with Pakatan Harapan Manifesto

While the Pakatan Harapan manifesto includes provisions for oil royalty for Sabah, Chief Minister Mohd Shafie Apdal noted that its specific content "is somewhat different from what we understand." This suggests that the manifesto's language or intended implementation may not fully align with Sabah's expectations for the 20 per cent claim, necessitating further dialogue.
Path Forward for Discussion

To address these differing interpretations, the Sabah government plans to engage in further discussions with Prime Minister Tun Dr Mahathir Mohamad. The establishment of a specific body is intended to facilitate these fine-tuning discussions between the state and federal governments, aiming to reconcile their respective understandings of the oil royalty calculation.

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What is the difference in royalty understanding between Sabah and federal?

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