ISLAMABAD, April 15: International donor agencies led by the World Bank have informed the government that the lack of legal/regulatory and institutional framework in the ministry of petroleum and natural resources is blocking a sizable foreign investment in the country’s mineral sector.

Informed sources told Dawn on Friday that the donors also wanted the government to ensure uniformity of procedures, mineral concession rules and regulations and incorporation of social and environmental aspects in manners satisfactory to the foreign investors.

The government was proposed to urgently go for “institutional strengthening” of the ministry of petroleum to attract foreign investment. The sources said the international donor agencies were reluctant to help attract foreign investment in Pakistan’s largely undeveloped mineral resources in the absence of any strong coordination agency at the federal level.

“The government was also asked to rationalise fiscal/taxation regimes with a view to helping small-scale minerals, including coal, gemstone and dimension stones,” a source said, adding that considerable capacity improvements were needed to help establish mineral frameworks that were consistent at the federal and provincial levels.

The government was informed that lack of institutional arrangements had impeded progress to attract any substantial foreign investment in the mineral sector. The World Bank believes that a strong coordination agency was essential to ensure active interaction between the Centre and provincial governments with a view to developing the mineral sector on scientific lines.

The bank wanted Pakistan to strengthen the mineral wing of the ministry of petroleum if no new coordination agency could be created immediately. It was of the view that the government needed to effectively implement its National Mineral Policy (NMP), promote mineral sector development and make necessary arrangements to define and coordinate development initiative at federal, provincial and regional levels, in line with international best practices. It also called for generating basic geological data to the extent of identification of exploration targets.

The World Bank has also called upon the government to properly identify exploration targets which are required to be developed into investment opportunities, envisaging qualitative and quantitative assessment of the mineral deposit and techno-economic parameters for making a decision on commercial exploitation.

“This requires high capital investment and, therefore, the government needs to offer investment-friendly policies to the foreign investors by continuously improving the NMP announced in 1995,” another source said.

The government has agreed with the donors that mineral exploration is a high risk capital investment. To facilitate multinational mining companies operating mineral projects, it is imperative to strengthen the mineral wing of the ministry for strengthening economic policy and management and to have broad based professional development for efficient planning, investment promotion and better coordination by the industry.

The sources said that constant monitoring was required to maintain the progress being made by multinational mining companies as their mineral projects require constant supervision.

On the request of the petroleum ministry, a team of the World Bank made a detailed study on strengthening of the mineral wing required for the development of the country’s mineral sector.

The World Bank has recommended that at the federal level the first priority should be the capacity building of the wing for the creation and implementation of federal and provincial mineral development programme. The bank further recommended that due to understaffing, the mineral wing could not carry out all the required functions, hence required urgent strengthening in line with practices found in mineral units of successful mining countries.

The bank also proposed to induct additional professionals along with the supporting staff to coordinate and implement the new mining objectives and to seek resolution of disputes regarding application for mining titles, provision of online information to potential investors in all the provinces.

Prime Minister Shaukat Aziz, the sources said, would soon be assigning new goals and targets to the ministry of petroleum for mineral development to be accomplished by the mineral wing. The wing is currently monitoring five development projects, two each in NWFP, Azad Jummu and Kashmir, and one in the Northern Area to develop small scale mining in gem bearing areas.

The ministry of petroleum has launched three more projects — gasification of Thar coal, feasibility study for development of Chichali iron ore and basic training in gemstone cutting and polishing. The ministry has been advised by the prime minister to undertake promotional activities on marketing geological potential of Pakistan.