(Kuching, 22nd) The Kuching High Court is scheduled to deliver a verdict on February 3 regarding the judicial review leave application submitted by five subsidiaries of Petroliam Nasional Berhad (PETRONAS) against the RM120 million fine imposed by the Director of Gas Distribution and Utilities and Telecommunications Ministry of Sarawak.
High Court judge Dean Wayne is expected to announce the decision, determining whether to grant or dismiss the subsidiaries’ application for leave.
The five subsidiaries involved are Malaysia LNG Sdn Bhd, Malaysia LNG Dua Sdn Bhd, Petronas Carigali Sdn Bhd, Malaysia LNG Tiga Sdn Bhd, and Petronas LNG 9 Sdn Bhd. These entities were fined for failing to obtain operating licences in Sarawak as required under Section 7 of the Gas Distribution Ordinance 2016 (DGO 2016).
According to Section 21A of the Ordinance, each case can be fined up to RM20 million. In this case, the authorities issued eight penalty notices, resulting in each entity being fined RM15 million.
The lawyers representing PETRONAS, Khoo Guan Huat and Alex Ngu Sze Shae, argued that the subsidiaries fall under the jurisdiction of the federal Petroleum Development Act 1974 (PDA 1974) and are not subject to the DGO 2016, which is state legislation.
They contended that the DGO 2016 does not apply to these subsidiaries because the Sarawak State Legislative Assembly (DUN) allegedly exceeded its authority as granted under the State of Borneo States (Legislative Powers) Order 1963. The dispute concerns licensing conditions related to the processing, processing, separation, and transportation of natural gas, as well as the construction or maintenance of gas distribution pipelines.
Federal Senior Deputy Public Prosecutor Ahmad Hanir Hambaly, representing the Attorney General’s Chambers, informed the court that the authorities had previously indicated in writing that they did not object to the subsidiaries’ application for judicial review leave.
However, Datuk JC Fong, State Legal Counsel representing the Sarawak Attorney General’s Chambers, pointed out that the five subsidiaries had not demonstrated sufficient grounds to proceed with the judicial review.
He emphasized that legally, subsidiaries are corporate entities independent of their parent company.
He said: “The PDA only grants petroleum ownership to ‘PETRONAS’ as defined within it and does not cover its subsidiaries. Therefore, powers conferred to PETRONAS under the PDA, such as operating petroleum marketing and distribution businesses without the Prime Minister’s approval under Section 6, do not apply to PETRONAS subsidiaries. On the contrary, subsidiaries must comply with state laws relating to natural gas supply and distribution and obtain licences under the DGO.”
He further explained that under Article 95C(3) of the Federal Constitution, the State of Borneo States (Legislative Powers) Order 1963 grants the Sarawak State Assembly legislative power over gas distribution, meaning this matter falls within the Concurrent List.
Therefore, he stated that the Sarawak State Assembly has absolute power to enact laws for the distribution of natural gas within the state.
Also present at the hearing was State Senior Deputy Public Prosecutor Mohd Adzrul Adzlan from the Sarawak Attorney General’s Chambers.
High Court judge Dean Wayne is expected to announce the decision, determining whether to grant or dismiss the subsidiaries’ application for leave.
The five subsidiaries involved are Malaysia LNG Sdn Bhd, Malaysia LNG Dua Sdn Bhd, Petronas Carigali Sdn Bhd, Malaysia LNG Tiga Sdn Bhd, and Petronas LNG 9 Sdn Bhd. These entities were fined for failing to obtain operating licences in Sarawak as required under Section 7 of the Gas Distribution Ordinance 2016 (DGO 2016).
According to Section 21A of the Ordinance, each case can be fined up to RM20 million. In this case, the authorities issued eight penalty notices, resulting in each entity being fined RM15 million.
They contended that the DGO 2016 does not apply to these subsidiaries because the Sarawak State Legislative Assembly (DUN) allegedly exceeded its authority as granted under the State of Borneo States (Legislative Powers) Order 1963. The dispute concerns licensing conditions related to the processing, processing, separation, and transportation of natural gas, as well as the construction or maintenance of gas distribution pipelines.
Federal Senior Deputy Public Prosecutor Ahmad Hanir Hambaly, representing the Attorney General’s Chambers, informed the court that the authorities had previously indicated in writing that they did not object to the subsidiaries’ application for judicial review leave.
However, Datuk JC Fong, State Legal Counsel representing the Sarawak Attorney General’s Chambers, pointed out that the five subsidiaries had not demonstrated sufficient grounds to proceed with the judicial review.
He emphasized that legally, subsidiaries are corporate entities independent of their parent company.
He said: “The PDA only grants petroleum ownership to ‘PETRONAS’ as defined within it and does not cover its subsidiaries. Therefore, powers conferred to PETRONAS under the PDA, such as operating petroleum marketing and distribution businesses without the Prime Minister’s approval under Section 6, do not apply to PETRONAS subsidiaries. On the contrary, subsidiaries must comply with state laws relating to natural gas supply and distribution and obtain licences under the DGO.”
He further explained that under Article 95C(3) of the Federal Constitution, the State of Borneo States (Legislative Powers) Order 1963 grants the Sarawak State Assembly legislative power over gas distribution, meaning this matter falls within the Concurrent List.
Therefore, he stated that the Sarawak State Assembly has absolute power to enact laws for the distribution of natural gas within the state.
Also present at the hearing was State Senior Deputy Public Prosecutor Mohd Adzrul Adzlan from the Sarawak Attorney General’s Chambers.