Oct 12 - 18, 2009

Oil and Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) have won eight licenses to search for oil and gas in Balochistan. While OGDC has been awarded five blocks, the PPL won three out of the total 14 onshore licenses given in Balochistan on September 30.

The OGDC plans to drill at least nine wells for the first time in six years in the province where half of Pakistan's gas reserves are found. Tremendous gas potential of the province may be tapped by granting maximum exploration licenses to foreign oil and gas exploration companies. What is the most discouraging factor from investment point of view is the prevailing security problem in Balochistan.

The PPL is the country's largest exploration and production company, which has been dominating the arena of oil and gas exploration for many decades in the province. It is the operator of the country's oldest Sui gas field in Bugti tribal area. Some technical and legal issues were involved in the strategic sale of PPL's majority shareholding. A significant issue was the formal transfer of PPL shares to the Balochistan government. The federal government however did not accept the province's demand regarding the ownership of PPL. Critics blame the former government of chief minister Jam Yousaf for softening its stand on the issue, as the federal government agreed to provide 'reasonable shareholding' to Balochistan in the PPL.

An agreement in principle has reportedly been reached between the federal and provincial governments to allow 15-20 per cent shareholding to Balochistan along with proportionate representation on its board of directors to end a long-standing provincial claim over the company.

The government must open up the Balochistan province for exploration and production activities to fully and efficiently exploit its gas potential. The province is strategically located in the region of immense geo-economic and geo-political importance. The E&P projects will open up the land of Balochistan converting it into a land of opportunities for foreign investors. Geographically, it is the same province from where the greater part of the proposed multibillion gas pipelines would have to traverse-either from Iran, Qatar or Turkmenistan.

It is in the supreme national interest that security environment in the province would be ideal for bringing foreign investment in the country. It is undeniable fact that security and economy are interlinked.

From economic point of view, Sui gas field is of immense importance for the country. It is the single largest source of energy supply for different industries, power generation, agriculture, commerce, and household use in the country. Gas from Sui is also used for the manufacture of fertilizer and other chemicals. The quantum of natural gas production from Sui gas field is a vital source of huge foreign exchange savings for the country as the same would have been spent on the import of energy had the gas reserves in abundance not been discovered. Unfortunately, the province has been deprived of its due share in terms of royalty and economic benefits.

For the present government, the big challenge is to bring the Baloch dissidents into national mainstream and to use military might against the separatist elements attacking the settlers, personnel of security agencies and the public installations. Unfortunately, the decision-makers in Islamabad and Quetta have so far shown inaction and indecisiveness in regard to the many issues confronting the restive province.

The province has suffered mainly because of the arbitrary and discriminatory policies of the successive governments in Islamabad. Ironically, while the federal government has been arbitrarily subsidizing the sale of natural gas from Balochistan to consumers in other provinces without the province's consent, the province was left with no funds to finance its annual development program. The centre has not yet resolved the contentious issue of sharing the Gas Development Surcharge (GDS) in the case of Balochistan. It is the important issue that has also kept the province economically under-developed and poor.

The province has billions of rupees outstanding against federal and Sindh governments.

The gas surcharge dues include Rs128 billion owed by the federal government and Rs23 billion by the Sindh government. Moreover, over Rs.24 billion irrigation dues are outstanding against Sindh government. While the province has been facing serious financial problems, it could not get its outstanding dues against centre and the Sindh. Ironically, the outstanding dues against Balochistan are recovered by the centre by all means and the province's dues outstanding against centre and other provinces are not paid.

The killing of Nawab Akbar Bugti on 26th August 2006 in a military action certainly added fuel to the fire. The incident further deepened the crisis of confidence between the province and the center leading the insurgency-hit province from the reconciliation track to the violence again.

What is needed is to create real security environment that will serve long-term objectives associated with the economic development of the province. What is critical for creating a real security environment is the creation of local stake and fair distribution of development gains. When the prevailing chaos and resentments in the society come to an end, new doors to optimism, cooperation and prosperity would open. The politics of issues would find no rich grounds and be replaced by the economics of issues with viable solutions. The government must take such measures, which could allay the sense of alienation, bring dissidents into the mainstream, and assuage their grievances.

Prevailing situation in the province calls for a halt to any military expedition and initiating a constructive dialogue with genuine representatives of Baloch people. It also underlines the need for a participatory federation providing constitutional guarantees for social, cultural, and economic rights to the people without any discrimination.

Today, the separatists, who are pursuing their agenda outside the country's constitutional framework, are fueling the fire of a struggle for independent Balochistan, against the nationalists, who have been demanding their political and economic rights, as enshrined in the Constitution of 1973. The federal government has so far rendered a lip service to the just struggle of Baloch nationalists within the constitutional framework. A need is direly felt to marginalize the separatists from the Baloch nationalism. This would only be possible when the rulers take serious and tangible measures for granting political and economic autonomy to the province.