UNUSABLE RIGHTS OF SMALL PROVINCES ON GAS FIELDS

TARIQ AHMED SAEEDI 
(feedback@pgeconomist.com)
July 25 - 31, 20
11

A tug of war over the natural resources between the provinces and the centre echoes in the Pakistan's 64-year history with the provinces mainly small ones that contribute major shares to the national oil and gas production staying discontent on the resources allocated back to their developments. Yet again, the debate has caught energy when oil and gas development company limited namely OGDCL refused to budge from its ownership rights over the inoperative gas fields discovered in the province of Sindh.

While advocates of provincial mandates conferred on the provinces under the newly inserted 18th amendments to the Constitution evoked latest provisions in defence of the provincial rights over the local resources, the nation's largest oil and gas producer run by the federal government claimed its rights over the sale proceeds from the fields. The company said it had acquired licences of and subsequently made sizeable investments in the fields to bring them up to the production stage.

Combined production capacity of lately explored wells of Jakhro, Nur, Bagla and Sara West is estimated at 73 mmcfd. Jakhro is located near Shahdadpur, Nur and Bagla gas fields are near Badin, and Sara is based at Ghotki.

It is incomprehensible why the conflict of interest is being elasticized despite presence of clear laws that protect the ownership rights of a province over its assets. Economic coordination committee (ECC) should have taken the decision on the said fields as yet. But, ECC has failed to reconcile with the opposing Sindh government having legal backups to claim its ownership rights and obligations with regard to the gas fields. Worthwhile is to remember the response Prime Minster Yousuf Raza Gilani gave on a point of order in the National Assembly February this year. He clearly said provinces could decide on where and how to allocate their gas reserves.

Basically, it is not a matter of these fields that called the shots in the prolonged province-centre conflict this time round, rather Balochistan and Sindh-the largest shareholders in the national oil and gas production-have always been unhappy on the fact that their resources would not be spent on their developments. Recent constitutional amendments gave them some hope, but the latest confusion about the rights has started to dampen this. Council of common interest (CCI) was established with the mandate to mitigate the differences between the provinces. However, the body has yet to come up with an amicable solution especially related to the subject under review.

This issue might have been ignored had there not been an acute shortage of gas in the country that is affecting industrial and power generation operations in Sindh, Balochistan, and Punjab. Gas demand in Punjab is met by Sui northern gas company limited (SNGPL). Fertiliser, industrial and power sectors in the nation's largest province are witnessing adverse production slowdown due to gas shortfall. Therefore, uniform natural gas load management policy was proposed to stop gas supply for three days to compressed natural gas (CNG) stations in Punjab and for two days in Sindh. The saved gas would be transferred to fertiliser, power, and industrial sectors.

Out of ECC's allocated quantity of 276 mmcfd, Karachi electric supply company (KESC) is receiving an average 110 mmcfd from Sui southern gas company limited (SSGC) because of gas shortfall. This shortfall aggravates the power crisis woes in the city having about two million electricity consumers. Drawn-out management-union tussle over the downsizing has already crippled the unfortunate power sector in Karachi leading to the disturbed law and order situations on and off in all major thoroughfares. Protestors come out on roads against long load shedding. Underproduction has added insult to the injury.

Back to the provincial rights and obligations on the natural resources, experts call for alleviation of deprivation in the small provinces with regard to oil and gas exploitations. As said, both Balochistan and Sindh are not satisfied with the ownership of their assets by the centre. They should be at the helm of affairs of exploring and distributing oil and gas to other areas, according to a unanimous demand by the political reps of the provinces. The demand has erupted into the anti-state sentiments visibly in Balochistan. People in Balochistan have been a subject of oppressions for years by army and self-proclaimed tribal lords. Antidevelopment forces dragged the province to the stone age. Majority of its rural settlements are without fresh water supply, proper sanitations, and health and education facilities despite the fact that the province has a substantial share in national oil and gas production.

The fate of Sindh is not different. Having relatively a strong political say in the corridor of power in Islamabad, politicians of this province also failed to change the lives of their people. Inadvertently or intentionally, they could not bargain the due shares of the province with the centre. A typical example of this failure is non-reflection of gas resources exploitations on the daily lives of residents living on subsistence around the gas fields in the province.

Sindh produces more than 70 per cent of the total national gas production. As a matter of fact, Sindh and Balochistan contribute 94 per cent to total gas production of the country. Sindh produced one million cubic feet during 2006-07, according to Pakistan Energy Year Book 2007. National gas production in the same year was 1.4 mmcf. Balochistan's share was 0.3 million. Gas consumption in the country is unequal. Both the largest gas producers consume 46 per cent and 25 per cent respectively of their productions. Although the federal government shells out whatever little royalty to gas-producing province, sadly there is no law to ensure transfer of this fund further to the districts, which are the real energy basket. These gas-producing areas pose abysmal pictures of deprivations and underdevelopments.