Pakatan Harapan, in its Alternative Budget 2018, said it will offer 20 percent royalty to oil-producing states Kelantan, Terengganu, Sabah and Sarawak.

However, the coalition also indicated that it may scale back federal allocation with the increased oil royalty to the states.

"Pakatan Harapan agrees in principle to increase the royalty rate to 20 percent.

"However, we are mindful that we also have to ensure the fiscal budget and Petronas are not irreparably damaged by such an arrangement.

"Accordingly, these oil-producing state governments are expected to take on more budgetary expenditure...