Post-18th amendment: Oil revenue cake still unevenly distributed

As petroleum ministry drags its feet, provinces go without their due share in revenue.

ISLAMABAD: The smaller provinces have complained that the ministry of petroleum and natural resources is dilly-dallying on the implementation of the 18th constitutional amendment, The Express Tribune has learnt.

Under the 18th amendment a new section has been inserted in Article 172 of the Constitution which says that the provinces have the right of ownership on oil, gas and minerals in their areas. And that the income generated from these resources will be shared with the federal government on an equal basis.

However, an official source in the Khyber-Pakhtunkhwa government said that it was not happening.

The provinces are not being given their share in revenues generated by the federal government from oil and gas produced in Balochistan, Sindh and Khyber-Pakhtunkhwa, the source told The Express Tribune.

A senior official in the ministry of petroleum and natural resources conceded that the provinces were receiving 44 per cent of the total revenue and the rest was going to the federal government. But the provinces claim that the federal government is getting 60 per cent of the revenue in clear violation of the 18th amendment.

The landmark 18th amendment was approved by parliament in April, 2010 but the  ministry has been delaying its implementation on one pretext or the other, the source said.

The provincial governments of Khyber-Pakhtunkhwa and Sindh made separate formal requests for the implementation of the 18th amendment by the ministry in August and October, respectively. They also requested the federal government for detailed formations about the ministry’s agreements with local and foreign oil and gas exploration companies and other relevant record. However, the ministry has neither accepted nor rejected the request.

“Over eight months have passed since parliament approved the 18th amendment. But the ministry of petroleum and natural resources has failed to fulfill its constitutional obligations despite repeated demands by the provinces,” the source added.

The ministry had reportedly told Khyber-Pakhtunkhwa and Sindh governments that modalities for the implementation of the 18th amendment are being worked out and it would be implemented as soon as they are finalised.

Nonetheless, the ministry could not hold meetings with the provinces, except one, and kept delaying the implementation process, the source alleged. “Meetings were convened, twice by the additional secretary to discuss the issue but were postponed without any reason being assigned,” he added.

The ministry says that the revenue being generated through previous agreements (signed between the ministry and oil companies before the 18th amendment) is not subject to sharing with the provinces. However, the provinces do not agree with this interpretation of Clause C of Article 172.

The ministry also plans the establishment of a Petroleum Concessions and Management Authority through an act of parliament. According to the draft bill, all provinces will be represented on the authority.

The body, to be headed by the ministry’s director-general of petroleum concessions, will award fresh oil and gas exploration licences to companies in consultation with representatives of the provinces. However, the provinces have already rejected the draft bill.

Published in The Express Tribune, January 10^th, 2011.