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Carbon trading deal not finalised

Hajiji (right) discussing with DCM Datuk Seri Moktar Radin at the State Assembly yesterday.

KOTA KINABALU: The controversial Nature Conservation Agreement (NCA) is not yet finalised as there are still a lot of matters that the State Attorney-General’s Chambers (AGC) and the consultant company Hoch Standard (HS) need to do, said Chief Minister, Datuk Seri Hajiji Haji Noor.  

 He said the matter is still at negotiation stage, with a lot of matters that the State AGC have to add and which HS has to fulfil.    “But, if I look at it, this matter is still far away,” said Hajiji, who is also State Finance Minister, when asked about the NCA by the opposition assemblymen when winding up for the Finance Ministry at the State Legislative Assembly (DUN) sitting, Thursday.

Assuring that the State Government would update all assemblymen on the matter in the next sitting, Hajiji said this includes whether the State is able to proceed with the carbon trading, the trading mechanism or management.    

On whether the consultant company would get 30 per cent commission from the proposed venture, the Chief Minister said as the matter is still on the negotiation table as to how many per cent the Government would get and how much goes to the company.  Asked if it would be less than 30pc, he said he hoped so because then the Government would get more.

“That is what we want. Because if we can get revenue from this source it will help the Government to have more money to assist the rakyat (people).“Hopefully this effort will be successful. When it is successful, we will be able to increase allowances (of the elected representatives), increase the allocations. But it must be managed well,” he said.

On the suggestion for the State Government to set up a special committee to scrutinise or regulate the carbon trading, Hajiji said he would look at this suggestion seriously and if required, the State Government would set up such a committee for it to be more transparent.

Earlier, Hajiji said a committee led by Finance Minister II, Datuk Seri Masidi Manjun had been set up to continue negotiations with the Federal Government on the Sabah Special Grant under the state rights provided in the Federal Constitution.He stressed that the Government under his leadership would not set aside the struggle for the rights of this state which is very close to the hearts of every Sabahan.

“As everyone knows, the State Government and Petronas have signed a Commercial Cooperation Agreement (CCA) on Tuesday 7 December 2021. Through this collaboration, Sabah will get greater oil and gas revenue sharing, greater participation and control in oil and gas matters in Sabah under a joint commercial consultation framework with Petronas, while ensuring that the State retains its legal rights.

“The success of this CCA implementation collaboration requires wisdom, goodwill and understanding from both parties as well as ensuring that legal rights provide ultimate protection for the interests of the state.

“The State Government is offered to participate in the LNG Project through a share interest of up to 25 per cent at cost and without premium in Petronas subsidiaries. The payment method is deferred payments using dividends from the project.

“Petronas will continue to be committed to cash payment of oil royalties and State Sales Tax as part of getting a greater revenue share in the oil and gas industry,” said Hajiji.He said the State Government was also aware that the revenue enjoyed at this time depended heavily on the performance of petroleum commodities and crude palm oil, whose market value was beyond the Government’s control.

“Fluctuations in the market price of petroleum products and crude palm oil are determined by demand in the global market. Although the current market price of petroleum products and crude palm oil is quite competitive, in ensuring the collection of State Revenue remains strong and sustainable, the State Government is always striving to obtain new sources for the state’s revenue.

“As a caring government, this Government will ensure that new sources of revenue will not burden any party, even a win-win or win-win approach, is the basis for the government to take action in the interest of the state and the people.

“At the same time, the State Government will continue  efforts to improve revenue collection and reduce revenue arrears through various approaches including improving the collection system, strengthening enforcement and increasing State Government investment returns.

“All these initiatives and efforts need to be supported with high commitment, cooperation and strong support from all parties. Therefore, the Government also welcomes suggestions from all parties in increasing and diversifying state revenue sources,” he said.

On the State Government’s tax strategy or policy, Hajiji said, the collection of revenue from the State Sales Tax is very important and one of the main contributors to the State Government’s financial resources.Therefore, he said, the Government at this time did not intend to reduce the rate on any type of tax that is being collected, let alone with prices such as Crude Palm Oil (CPO) which is relatively high now.

“However, the Government is ready to consider beneficial proposals from the industry that can provide high returns and economic spillover effects to the State.

” Regarding petroleum products subject to State Sales Tax, Hajiji said, the State Government currently only imposes tax on two types of petroleum products, namely petroleum crude oil and natural gas or liquefied natural gas at a rate of 5pc for each product.

“However, if found necessary and appropriate, then the State Government will impose a tax on other petroleum products which also include by-products or by-products, without affecting the production and development of the downstream oil and gas industry,” he said.

On the payment by court order amounting to RM130 million in 2022, Hajiji said the provision was to pay the cost of compensation claims due to early termination of the Sabah Water Department outsource concession contracts which were improperly terminated by the previous state government on January 2019.

“Several consultation sessions have been held between the concessionaires and the State Attorney General’s Chambers since 2020 before it was finalised with a saving of RM88 million to the Government,” he said.

In relation to the state loan from the Federal Government as raised, Hajiji explained that the Federal loan under vote D33 amounting to RM546.96 million was a loan to the Sabah Water Department and the Sabah Sewerage Services Department.He said, for next year, the Sabah Sewerage Services Department received a loan approval of RM 320.2 million, while the Sabah Water Department has been approved a loan of RM 226.76 million.

“These two loans are high-impact projects that are not included in the federal grant amounting to RM5.2 billion. The Federal loan was taken due to financial constraints over the past decades.

“This loan is a simple loan concept that has no loan interest and the repayment period is 25 years. Other Federal loans with a commercial concept are charged an interest rate of 4 percent and the repayment period is between 10 to 23 years,” he said.

He said it is a strategy of the State Government from the past until now that has borne fruit in the development of the state.“In any planning, the purpose of this loan is to enable the State Government to enjoy the benefits of development earlier,” he added. 

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