Deadlock persists as provinces refuse to give up ‘first right of use’ of natural gas

Reject Petroleum Division proposal that gives priority to consumers across country

ISLAMABAD: Provinces have turned down a proposal floated by the federal government that asks provinces to withdraw their first right of use over natural gas and give top priority to domestic consumers across the country.

The proposal, taken up by the Council of Common Interests (CCI) in its recent meeting, was aimed at overcoming the emerging gas crisis in winter.

Under Article 158 of the Constitution, gas-producing provinces like Balochistan, Khyber-Pakhtunkhwa and Sindh have the first right of use over the natural resource found in their jurisdictions. However, Punjab, which has a large population, has been impacted the most by the article.

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Keeping that in view, the Petroleum Division tabled a summary before the CCI, seeking amendment to Article 158 in a bid to give exclusive rights over gas consumption. However, provinces, especially Sindh, opposed the proposal.

The CCI - an inter-provincial body - took up the matter for discussion, during which the Petroleum Division minister was advised to consult chief ministers of the provinces for coming up with a workable solution, sources told The Express Tribune.

A committee comprising chief ministers of provinces and the Petroleum Division minister was constituted to discuss the plan further and develop consensus.

“Yes, the proposal was discussed in the CCI. The matter is sub judice in the Supreme Court and we are awaiting its decision,” remarked Petroleum Division Secretary Asad Hayauddin while responding to a query.

In the meeting, the provinces were told that the federal government was of the view that the people of Pakistan were the ultimate owners and beneficiaries of natural resources and the federal and provincial administrations had the fiduciary duty to act solely in the interest of beneficial owners of the resources.

According to the federal government, under this principle, both the centre and provinces have to work for the management of resources in the interest of people of the country and will not engage in any effort which seeks to disintegrate and damage the relationship between the federal government and the federating units.

The Pakistan Tehreek-e-Insaf (PTI) government in the centre insists the role of federation is to create harmony amongst its federating units. Therefore, any available resource with the federating units needs to be seen from the perspective of national resource and the provision of basic necessities including natural gas needs to be ensured without any discrimination to the domestic sector within the province in which a natural gas wellhead is situated as well as across the country.

According to the interpretation of Article 158, the province in which a natural gas wellhead is situated shall have precedence over other parts of Pakistan in meeting requirements from that wellhead subject to the commitments and obligations as on the commencing day.

However, Article 172(3) provides for vesting minerals, oil and gas in the federation and provinces jointly and equally, which is to be seen in the public trust doctrine where the ownership of oil and gas rests with the people of Pakistan.

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According to this clause, the CCI shall exercise exclusive authority to regulate policies in relation to minerals, oil and natural gas, make rules and regulations to regulate the policies formulated by it and approve model petroleum concession agreement/production-sharing agreement to give binding effect to the incentives and packages of the policies approved by it.

Parliament shall have exclusive powers to legislate in the matter of minerals, oil and natural gas in line with the policies approved by the council, the clause says.

In the recent CCI meeting, the Petroleum Division submitted a plan of prioritised gas consumers in relation to implementation of Article 158 for consideration and approval by the CCI.

The Petroleum Division proposed that first priority in natural gas consumption should be given to domestic consumers in all provinces, adding the federal capital, tribal areas, Azad Jammu and Kashmir, Gilgit-Baltistan, defence and strategic installations should be placed in the second category.

It called for placing power and fertiliser plants in all provinces in the third category.

It proposed the consumption of imported gas without any restriction by any consumer in all provinces. It also suggested that the federal government would allocate gas based on the proposed prioritised categories in consultation with the provinces.

Published in The Express Tribune, December 26^th, 2019.

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