KUALA LUMPUR, Sept 13 (AFP) - Malaysia's Islamic opposition party said Wednesday it may sue the government for seizing control of oil payments worth tens of millions of dollars previously allocated to a state it controls.
Parti Islam SeMalaysia (PAS) will take legal action if negotiations with the government fail, said Abdul Hadi Awang, its deputy president and chief minister of the northeastern state of Terengganu.
"The door for negotiations is still open and we do not know (the stand) of the other side," he was quoted as saying by the national news agency Bernama.
PAS won control of Terengganu in elections last November in a bitter blow to the ruling National Front coalition.
Terengganu has since 1978 received a direct annual payment from national oil firm Petronas equal to five percent of the value of offshore oil and gas production.
The state calls this a royalty payment but the central government says Terengganu is not entitled to royalties since the oil is too far offshore and calls it a "goodwill contribution."
Last week the finance ministry announced it was taking control over the annual payments to the state government.
This year's payment will be worth an estimated 810 million ringgitmillion dollars), almost twice as much as last year, following a sharp rise in world oil prices.
The finance ministry said a federal-level committee would in future spend the payment directly on development schemes to help the poor in the state.
It said it had no details on how Terengganu used a "goodwill payment" of 432 million ringgit (114 million dollars) it received in February, and was not confident the PAS administration would spend the money wisely.
Opposition leaders criticised the move as an attempt to undermine the state administration. PAS president Fadzil Noor has accused the government of "raping" democracy and demanded that the plan be called off.
The Terengganu legislative assembly Tuesday passed an emergency motion, condemning the federal government's move and describing it as a breach of democracy.
"It's contrary to democracy and federalism ... clearly interfering in the state affairs," Abdul Hadi said after the assembly meeting Tuesday.
On the 432 million ringgit, Hadi said the state government was prepared to have its books audited.
"If the federal government wants to audit us every month, I'm for it. But then again, it will be in a violation of the ruling that permits auditing to be carried out once a year," he added.
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