KUALA LUMPUR: Sabah’s claim of 20 per cent in oil royalty may boost its annual revenue stream to up to RM 4 billion, says RAM Rating Services Bhd.
In a statement today, the ratings agency said Sabah’s current revenue collection is already superior compared to other states in Peninsular Malaysia at RM4.2 billion in 2017.
“Sabah is claiming 20 per cent in royalties on oil produced in the state. As negotiations will be lengthy, we have not factored any potential extra revenue into the state’s financials.
“Sabah’s revenue collection is superior to that of all other states in Peninsula Malaysia, amounting to RM4.2 billion in 2017.
“Should the 20 per cent royalty claim materialise in the future, we expect between RM3 billion to RM4 billion boost to Sabah’s annual revenue stream, which could significantly fund development projects in the state,” it said in the statement.
Sabah’s RM1.0 billion Bonds (2014/2019) are currently rated AAA/Stable on RAM’s national scale.
“The rating is premised on our expectation that the relationship between the state and federal governments will stay solid.
“Any material erosion of federal government support for Sabah will precipitate negative rating action,” it added.