KOTA KINABALU: The federal government is ready to revise the existing 5% in royalties paid to oil-producing states, says Tun Dr Mahathir Mohamad.
However, any new rates received by such states should be done without "killing" Petronas, said the Prime Minister.
"We don't want to kill Petronas. If we take 40% for oil royalties from its operating cost, Petronas will lose money," he said.
Malaysia stands to lose out if Petronas is merely reduced into an instrument to collect oil royalties as the company is unique and its work highly sought after worldwide, said Dr Mahathir.
"Petronas is a unique company as it's the only national oil and gas company that goes into exploration, development and production into petrochemicals.
"If you reduce Petronas to just collecting oil royalties, then we lose a lot of things.
"So we need to maintain the strength of Petronas but at the same time we feel that there is a need to re-look at some things.
"The 5% is part of the operating cost and that's very big," Dr Mahathir told reporters before departing for Kuala Lumpur on Monday morning (Sept 17).
Pakatan Harapan in its GE14 manifesto had pledged to raise oil royalties for all oil-producing states to 20% from 5% currently.
Asked if the federal government would be giving up its 5% royalty, Dr Mahathir said that the federal government has been giving back to the states in Malaysia.
He said that in fact, many states still owed money to the federal government.
"There are non-performing loans, that means we can bankrupt you if you don't pay.
"But the states have got money, they are even offering to lend money to the federal government," he said.
Dr Mahathir, who was here for the Malaysia Day celebrations on Saturday (Sept 16), added that there is a need for fairness."I think we should learn to live together and to be fair to each other," he said.