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Sabah’s pipe dream

(© Kevin Abbott /

THE controversy over the proposed RM1.6 billion gas pipeline running from Kimanis, Sabah to Bintulu, Sarawak illustrates a classic problem. It shows how, in a federated system of government, the power centre at the federal level can divide, rule, and exploit marginal outlying states.

The project is huge. The offshore gas will be landed at Kimanis, pumped through a pipeline that will run for about 500km — 90km in Sabah and 410km in Sarawak. It will cut across 300 rivers, streams, and very inhospitable mountain regions.

The media reported in March 2008 that Petronas Carigali Sdn Bhd had awarded a contract worth RM1.6 billion to a consortium led by Dialog Group Bhd to build the pipeline, expected to be completed by 2011. The consortium is made up of Dialog E & C Sdn Bhd, India’s Punj Lloyd Ltd, and Sabah’s Petrosab Logistics Sdn Bhd. A month later, a subsidiary of Wah Seng Corp Bhd won a contract worth RM390 million to manufacture, coat, deliver, and store pipes for the project.

Such a massive injection of funds would seem to bring a windfall of “development” to Sabah, with the possibility of nurturing the petrochemical industry and all downstream activities.  So why are the political leading lights so set against the project?

In fact, Tan Sri Bernard Dompok, Minister in the Prime Minister’s Department and president of the United Pasokmomogun Kadazandusun Organisation (Upko) even threatened to leave the Barisan Nasional (BN) if the project went ahead.

To understand why, we have to revisit long-standing grouses among Sabahans, and Sarawakians as well, against federal exploitation of this valuable natural resource in their state. There just haven’t been tangible benefits to the local people.

Milking Sabah dry

As they see it, this project is just another federal attempt to milk Sabah dry, while a great percentage of Sabahans still live under the poverty level. In fact, the eastern Sabah regions like Sandakan are on the verge of an energy crisis.  Meanwhile, the only payment that Petronas has to make to the Sabah state government is a paltry 5% royalty.

Chicken and duck talking

So far, the public conversation between Petronas chief Tan Sri Hassan Merican and Sabah political leaders is like a dialogue between a chicken and a duck.  The Petronas CEO sees himself as a technocrat only, and his decision is entirely based on rational business consideration. It is all about the bottom line of profit and loss for Petronas.

Petronas is wholly owned by the federal government.  It is vested with the entire ownership and control of all petroleum resources in Malaysia through the Petroleum Development Act 1974. It is a powerful multinational company, a power unto itself.

In Malaysia, all energy policies are crafted and overseen by the Economic Planning Unit (EPU) and the Implementation and Coordination Unit (ICU).  Both of these answer directly to the prime minister. In short, the prime minister is the ultimate boss for Petronas, which then becomes a cash cow at his disposal in his macro-economic planning and dispensation of patronage. In reality, Petronas can simply ignore state politicians in Sabah.

But Sabahans see things differently. They see the RM1.6 billion project as just another blood-sucking scheme from Kuala Lumpur, while the majority of the Sabah population wallow in socio-economic backwardness.

Divide and rule

The most vocal critic of the gas pipeline project, Datuk Yong Teck Lee, president of the Sabah Progressive Party (SAPP), said on 10 Nov 2008 in Kota Kinabalu:

“That gas and oil belongs to Sabah, not anybody else. Petronas only has a right to extract the oil and gas. If we cannot use it, then do not exploit it. Leave it there for future generations.

“The state government can consider stopping the gas pipeline by using its powers under the land laws, which is a state matter under the federal constitution, to stop the access and transit of the pipeline.”

The Sabah state government will not do that. The chief minister is an Umno man, and one does not expect him to go against the prime minister, who is also Umno president. It is a maxim in Malaysian political realism that personal and party interests must come before the people’s interest.

In the end, even Dompok did not make good his threat of withdrawing from the BN when the prime minister announced the revival of the once-ditched gas pipeline project. Yong had this to say in explanation:

“The failed appeal of Upko to scrap the 500km Petronas gas pipeline from Kimanis to Bintulu was not a complete surprise. SAPP reiterates that the grossly unequal and unfair equation of federal-state power has worked against a divided state like Sabah.

“It is common knowledge that if Upko were to carry out its threat to leave the BN, as reported in some papers, then Umno and BN can rely on PBS (Parti Bersatu Sabah) to fill in the void left by Upko. It is not a coincidence that the prime minister had chosen to announce the decision to go ahead with the gas pipeline at the PBS congress in Kota Kinabalu, while at the same time, praising PBS and its leaders. This is divide-and-rule in a glaring public display.”

It should be explained that this divide and rule tactic works because both Upko and PBS are competing for exclusive political representation of the non-Muslim population of Sabah within the BN coalition. An equivalent scenario exists in Sarawak.

It works because Umno has successfully infected Sabahans with the cynical and sophistic philosophy of communal politics.  That is a pity, because Sabahans, like Sarawakians, are the exemplars of very good racial relations in their daily life outside politics.

The only hope for Sarawakians and Sabahans to get a better deal in this lopsided federal state equation is for the Pakatan Rakyat to take power in both federal and state governments.  They are the king makers in federal politics.

Therefore, there is a real opportunity for their political rebirth and a renegotiation of the social contract that was struck in 1963 when Malaysia was formed.  But they may perhaps have to discard the politics of race first.TNG

Sim Kwang Yang was DAP MP for Bandar Kuching in Sarawak from 1982 to 1995.

See also:

Dompok committed to getting gas pipeline project scrapped

Dompok raises objection to gas pipeline project again

The conscience of the Barisan Nasional

Sabah gets its own petrochemical industry

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One Response to “Sabah’s pipe dream”

  1. Melvin Cheah says:

    It’s not that our federation is flawed, it’s that it’s virtually non-existent.

    The whole point of devolution is to ensure the ability of varying needs to coexist in a nation. The needs of law enforcement, or rural education funding, for example, varies between the states. Yet both are practically under the purview of Putrajaya.

    Rid ourselves of this faux federation, or devolve powers. There is no middle path, for straddling the line aggrieves all and pleases none. Well, except the warlords. They exist beyond our ecosystem, it seems.


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