KUALA LUMPUR: Kelantan will receive wang ehsan for the oil garnered outside the state’s shores from 2010 onwards.

Prime minister Datuk Seri Najib Tun Razak told Dewan Rakyat this morning that the wang ehsan will be paid after Petroliam Nasional Bhd has determined the quantum payable to the PAS-led state.

“The government has analysed all angles on Kelantan’s request for oil royalties to be paid to them,” said Najib.

“From a legal standpoint, Kelantan, like Terengganu, are only owed oil royalties from petroleum and liquefied natural gas extracted within 30 nautical miles of its shores. But currently, there are no drilling activities within Kelantan.

“As such, Kelantan has no rights to oil royalties,” he added.

But after considering Kelantan’s request, Najib said that the same consideration will be given to them from next year onwards.

According to him, Petronas told the government that there is currently one active block outside the 30-nautical mile radius of Kelantan.

“But we want to be fair to everyone, and Kelantan will hence get wang ehsan like its neighbours Terengganu although they are not entitled to anything legally,” said Najib, who is also the finance minister.

Najib, however, did not state the quantum as the federal government is waiting for Petronas to determine the amount payable.

But the premier stressed that the wang ehsan would not be given directly to the Kelantan state government, but will be managed by the federal government for the development of the state.

“Money will be channelled in the form of development projects to be handled by the federal government after discussions with the state government,” he explained.

Salahuddin Ayub (Kubang Kerian-PAS) asked Najib why oil royalties were changed to wang ehsan when his party took over Terengganu in 2000. The PAS vice-president disputed the term "wang ehsan" as it was not provided for in the agreements.

“You are trying to politicize the issue,” said Najib in reply. “What is more important is that we are trying to provide a fund for Kelantan so that they can enjoy the same benefits as Terengganu.”

Siti Zailah Mohd Yusoff (Rantau Panjang-PAS) asked why the federal government had not made such payments earlier.

“All this while, Kelantan has no right to get oil royalties. But we now see an oil-producing bloc which is worthy of consideration,” said Najib.

At a press conference after that, Najib said that the amount due will be based on what is produced in Kelantan from 2010, but stressed that any development in Kelantan would only be carried out after discussions with the state government there.

“In the 9th Malaysia Plan, the government has allocated a big sum RM7 billion to Kelantan. This is an additional amount which starts at 2010,” he added.

Unlike their counterparts in Sabah and Sarawak, Terengganu’s five percent oil royalties were switched to wang ehsan when PAS took over the state in 1999.

The oil royalty issue was raised after PAS members of parliament found Kelantan listed in the Statistics Deparment’s State/District Data Bank as one of four oil-and-gas producing states.