Social welfare: Balochistan wants revision in fund allocation formula

Says oil and gas firms should earmark funds in line with actual production

Zafar Bhutta October 31, 2015
Says oil and gas firms should earmark funds in line with actual production.


The Balochistan administration, while raising doubts over oil and gas production and sales figures given by the central government, has forcefully demanded a revision in formula for the allocation of social welfare funds by exploration and production companies.

At present, funds are earmarked by oil and gas production companies at a fixed rate for social welfare activities in areas where exploration work is undertaken, but Balochistan wants to link the funds with production of natural resources.

The demand was made in a meeting on October 7 that discussed an extension in the lease of Sui gas field. Petroleum and Natural Resources Minister Shahid Khaqan Abbasi and Balochistan Chief Minister Dr Abdul Malik Baloch were present.

During the deliberations, the chief minister said the provincial government relied on data of the federal government and Pakistan Petroleum Limited (PPL), but more transparency needed to be ensured. This would allow Balochistan to know about correct production levels and revenues from the sale of gas, he said.

He also proposed that Balochistan’s representative on the PPL’s board of directors should be a nominee of the provincial government that would protect and secure rights of the province.

The chief secretary of Balochistan stressed that financial expenses pertaining to corporate social responsibility (CSR) should not be fixed and be based on a formula linked with actual production.

He suggested that a committee should be constituted comprising representatives of the stakeholders that would give recommendations to address the issues effectively.

Issues pertaining to the windfall levy, royalty, lease rental and production bonus should be taken up by the committee in the light of the constitution and applicable laws, he added.

“The Balochistan government wants what is rightfully its share under the constitution,” the chief minister said, adding the province would like to utilise CSR funds itself instead of following the proposals given by the companies for building schools and hospitals.

He was of the view that incentives should be such that they attracted the locals to encourage investment in their respective areas.

Speaking about the extension in Sui mining lease, Petroleum Minister Shahid Khaqan Abbasi insisted that notwithstanding any provision of the constitution and its interpretation, the federal government wanted to bring the government of Balochistan on board while taking a final decision.

He clarified that the extension decision was taken on the last day before the expiry of the lease and that too for only one year in the larger national interest as an interim arrangement. That, he added, would help avert a disruption in gas supply and the interim arrangement would remain in place only until the resolution of outstanding issues.

He assured the province of his maximum cooperation and facilitation in finding a sustainable way forward as set out in the constitution and applicable laws and rules.

Published in The Express Tribune, November 1st, 2015.

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