Looks like Pas-led Kelantan will no longer have to deforest its land for income, according to the Ministry of Finance, the federal government had channeled RM400 million in petroleum payments to the Kelantan government for 2020 and 2021, an average of RM200 million per year.
The payment was given directly to the state government based on five percent of the state’s petroleum revenue, this was calculated based on the current price of petroleum.
Finance Minister, Tengku Zafrul said the amount was a multi-fold increase from the amount paid in 2019, which was RM28 million. The significant jump was due to the renegotiation of the royalty agreement between national oil giant Petronas, and the state government.
The issue has been a thorny subject for the government since Pas took up a lawsuit which it later dropped demanding higher royalty from oil extracted from its shores. Kelantan has been giving its valuable resources away practically for free since 1975 when the Kelantan Petroleum Agreement was drafted, in which there was no allocation for royalty.
Finally, in 2020, both parties came to a settlement where Petronas agreed to terms with Kelantan and the legal suit was then dropped.