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Malaysia's Islamists Bring Oil Money Dispute To Court
KUALA LUMPUR, March 8 (IslamOnline & News Agencies) - The Terengganu state government on Thursday filed a suit in the Kuala Lumpur High Court against the national oil company Petronas and the federal government run by Mahathir Mohamad, demanding the immediate reinstatement of oil royalty payments.
This decision by the Party Islam Se-Malaysia (PAS)-led government in Terengganu has cooled the idea of possible talks between the Islamic party and Mahathir's United Malays National Organization (UMNO) party.
Last year, the central government in Kuala Lumpur decided to cut off oil royalty payments paid to the state government of Terengganu under an accord signed in 1975 between Petronas and the Chief Minister of the state.
The recent withdrawal of oil royalty payments coincided with PAS winning the state in general elections in 1999.
Prior to that, the state received RM7.1 billion from Petronas from March 1978 to March 2000. From 1978 to November 1999, the state government was under UMNO control, the main party heading the National Front (NF) ruling coalition.
The state's representative Salleh Abas, said the annual oil royalty granted to the state contributed to about 75% to 80% of the state budget.
"With the withdrawal of the payments, the harsh truth is that the state government and the people are suffering," he told a press conference after filing the suit.
PAS officials said the legal action was the only alternative available for the state to regain oil royalty payments, adding that they had "a strong and impeccable case".
"We have no other alternatives as the next election is far away. At the moment, we need the money," he said.
They also said that the oil revenue non-payment had forced the state to reduce its spending in order to cover basic necessities.
"In previous years, the state budget would be in the region of RM700 million. This year, we have cut it down to RM300 million. We are struggling to even pay civil servants with this money," Terengganu state secretary Mazlan Hashim said.
Mazlan said the lack of funds due to the absence of oil royalty payments, had resulted in new projects that would benefit the Terengganu public being put on hold.
The PAS believes that the non-payment of the royalty is a political move made in order to jeopardize the PAS government in Terengganu.
Salleh added that goodwill monies paid by the federal government for development in the state in lieu of the oil royalty payments were not adequate at all as it "goes to the cronies of the government".
On September 5th of last year, the Finance Ministry issued a statement on the implementation of a new method of disbursing development funds to Terengganu. Under the new method, the state would no longer receive oil royalty payments, but instead funds in the form of goodwill monies to be used for development projects.
In October, the federal government announced a RM560 million payment to Terengganu under the goodwill monies special payment scheme. The PAS claims this payment has gone right into the hands of pro-government supporters in the state, depriving the people of Terengganu of their legitimate possessions.
Defending the non-payment of the royalty directly to the PAS administration, Mahathir said last year that his government did not trust the Islamists, adding that he suspected they will use the money for the advancement of their own political agenda.
In its suit, the Terengganu state government wants Petronas to adhere to the two agreements it signed with the state government in 1975 and 1987, which stipulated that the oil company was to provide payments to the state for oil taken from its territory.
It said that Petronas has failed to make a cash payment amounting to RM850 million in September last year for petroleum obtained from the state during the first six months of 2000.
"Despite failing to make the said cash payment, Petronas continues to obtain petroleum from the state," said the suit.
The state also claimed that by not paying the oil royalties, Petronas was depriving the state of its property rights without adequate compensation.
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