Douglas Uggah’s explanation of the huge shortfall in the Sarawak Government’s revenue in 2021 is not logical and cannot be acceptable.
In November, 2020, when the Sarawak Government tabled the 2021 Sarawak Budget, the Government’s revenue for 2021 was estimated to be RM10 billion.
However, as it turned out, as revealed in the 2023 Budget document, the actual revenue received by the Sarawak Government for the year 2021 was only RM7.6 billion, a 24% shortfall from the estimated figure.
I raised this issue during my debate on 25.11.2022 and sought an explanation from the Government.
Today, during his winding-up for the Budget debate, Douglas Uggah explained that the shortfall in the actual revenue of the Government was due mainly to the shortfall in the collection of oil royalties and sales tax on petroleum product.
Government’s royalties and sales tax on crude oil and petroleum products depend directly on the international crude oil prices. Logically, such a huge shortfall would entail that the international crude oil prices has fallen below expectation, thus resulting in less-than-estimated collection of royalties and sales tax.
However, if we look at the historical international crude oil prices for the year 2021, that is not the case. In fact, the international crude oil prices have gone up tremendously for the year 2021 compared to year 2020.
The average crude oil price for year 2020 was only US$39.68 per barrel while the average crude oil price for year 2021 was US$68.17 per barrel. At the start of 2021, the crude oil price was only US$47.62. By the end of 2021, crude oil price has gone up to US$75.21 per barrel.
The chart below showed the general upward trend of crude oil prices throughout the whole of 2021:
Therefore, against this general upward trend of crude oil prices, it is illogical that the royalties and sales tax actually collected by the government can fall so much short of the estimated figure, unless the estimates were an unrealistic estimate.
It is thus incumbent upon Douglas Uggah as the Minster of Finance II to provide a better and more detailed explanation for the RM2.4 billion shortfall in government’s revenue from the estimated figure.