Natural Resources: Lawmakers demand higher royalties

Lawmakers express reservations over the low rates of land rent given by oil and gas exploration companies.

Zahid Gishkori April 15, 2011


Lawmakers from Khyber-Pakhtunkhwa have urged the federal government to raise royalty rates for oil and gas reserves in the province to mitigate the sense of deprivation among the people.

“The federal government should raise royalty rates for natural resources in the K-P from 12.5 per cent to 15 per cent,” said MPA Mian Nisar Gul. He was briefing the Senate sub-committee of the Standing Committee on Petroleum and Natural Resources on Thursday.

Local people, especially those from the districts of Kohat, Hangu and Karrak, have not been getting their fair share of royalties. Some areas have not even been provided with natural gas. The Oil and Gas Development Company Limited (OGDCL) suffered a loss of Rs30 million due to a two-day strike which resulted in the closure of fields in these districts, Gul revealed.

Lawmakers expressed reservations over the low rates of land rent given by oil and gas exploration companies. They demanded employment for local people, investment on their welfare and the provision of gas to the villages situated close to drilling wells. However, a representative for MOL replied that they were paying rent according to the policy of the provincial government.

General Manager OGDCL, Mureed Hussain said that the rent has recently been raised to Rs3,600 per acre with the consultation of local people. The rent for the land leased to exploration companies fixed at the time of the deal should be periodically revised. Pakistan Muslim League Senator Pervaiz Rasheed also suggested that the amount earmarked for social welfare should be linked in percentage points with the fluctuation in international oil prices.

Managing Director OGDCL Naeem Malik emphasised the need to develop consensus among lawmakers, locals and other stakeholders for solving outstanding issues. Exploration companies are bound to pay 12.5 per cent royalty to the government. He said, “The federal government distributes royalties to the provinces after deducting administration charges. The provinces should spend the money on areas where exploration activities have been undertaken.”

DG Petroleum Concession Sher Khan said that the government enters into direct negotiations with landowners. The country has been divided into four zones and it is binding for exploration companies to invest at least $30,000 per annum before the discovery of resources on the people’s welfare. He said that MOL was granted a licence in 1999 and OGDCL has 30 per cent share.

The MPs, including the committee chairman of Senator Abbas Khan informed the petroleum ministry’s officials that MOL, a foreign firm which discovered oil and gas in Pakistan, had not hired locals for eight years except for security guards,” Gul said.

The petroleum ministry’s officials promised to forward a summary to Prime Minister Syed Yousuf Raza Gilani for the approval of schemes for the provision of gas to 18 villages.

Published in The Express Tribune, April 15th, 2011.


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