KUCHING: The High Court here today fixed March 2 for case management after allowing a judicial review application by five subsidiaries of Petroliam Nasional Bhd (PETRONAS) against a RM120-million penalty imposed by the Sarawak Gas Distribution Director and the Ministry of Utility and Telecommunications.
Judge Dean Wayne allowed the application filed by the companies after finding that the case required further arguments to be presented in a substantive motion.
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.
All the companies were penalised for failing to apply for an operating licence in Sarawak as stipulated under Section 7 of the Gas Distribution Ordinance (DGO) 2016.
Under Section 21A of the ordinance, the maximum penalty that can be imposed for each offence is RM20 million.
In this case, eight notices were issued to the companies, resulting in a penalty of RM15 million for each entity.
Earlier, on January 22 at the same court, lawyers representing PETRONAS, Khoo Guan Huat and Alex Ngu Sze Shae, argued that the companies were business arms subject to the Petroleum Development Act (PDA) 1974 under federal law, rather than the DGO 2016, which is a state law.
They contended that the DGO 2016 does not apply to the subsidiaries because the Sarawak State Legislative Assembly (DUN) had allegedly exceeded its powers under the Borneo States (Legislative Powers) Order 1963.
This relates to licensing requirements for activities involving gas treatment, processing, separation and transportation, as well as the construction or maintenance of gas distribution pipelines.
Senior Federal Counsel from the Attorney General’s Chambers, Ahmad Hanir Hambaly, informed the court that his office had earlier submitted a letter stating that it had no objection to the application for leave to commence judicial review filed by the PETRONAS subsidiaries.
However, State Legal Counsel Datuk Seri JC Fong, representing the Sarawak State Attorney-General’s Chambers, argued that the five subsidiaries had failed to demonstrate a case with sufficient merit to proceed through judicial review.
He stressed that the subsidiaries are separate legal entities from the parent company.
“The PDA only grants petroleum ownership rights to PETRONAS under the definition of ‘PETRONAS’ and does not extend to its subsidiaries.
“Therefore, any powers granted to PETRONAS under the PDA, such as businesses engaged in the marketing and distribution of petroleum without the Prime Minister’s approval as provided under Section 6, do not apply to PETRONAS subsidiaries, which must instead comply with state laws relating to gas supply and distribution. They must be licensed under the DGO,” he said.
He further explained that under Article 95C(3) of the Federal Constitution, legislative powers concerning gas distribution granted through the Borneo States (Legislative Powers) Order 1963 to the Sarawak State Legislative Assembly place the matter under the Concurrent List.
As such, he said the State Legislative Assembly (DUN) has absolute authority to enact laws relating to gas distribution in the state.
