ISLAMABAD, Dec 10: Balochistan has started negotiations with the federal government to acquire 20 per cent shareholding in the Pakistan Petroleum Limited and 25 per cent shares in all other concession licences for natural resources to ensure a constant revenue stream to the resource-rich starving province.
The PPL is the country’s oldest and largest exploration and production company with annual sales revenue touching Rs20 billion. It produces more than 300,000 million cubic feet of gas and more than 240,000 barrels of oil per year, besides substantial annual production of condensate, liquefied petroleum gas and other minerals.
Governor Owais Ahmad Ghani told Dawn that he expected the mineral sector to be a major revenue-generating source for the province on the longer run because of 25 per cent shares in each mineral concession agreement the provincial government would be signing with private investors from home and abroad. The province has already been given a 25 per cent shareholding in the Reko Diq mining area, whose value of copper and gold deposits are estimated to be over $70 billion at current market price. The Reko Diq mining area has proven estimated reserves of two billion tons of copper and 20 million ounces of gold. Copper and gold are currently traded at over $7,000 per ton and $640 per ounce respectively. Remaining 75 per cent stakes of the project have now been taken over on 50:50 basis by Antofagasta of Chile and Barrick Gold of Canada.
Mr Ghani said that he had requested to the federal government to provide 20 per cent shareholding in the PPL, which is the operator of Pakistan’s oldest Sui gasfield. He said a major shareholding may go to the private sector as the centre planned to sell it but since it was a provincial resource and had been feeding the entire nation since independence, a shareholding would be of great help and justice to the province.
The provincial government, he said, had been discussing with the centre to ensure 20 per cent shares in the company along with a member on its board of directors to increase provincial revenue.
Responding to a question on the National Finance Commission award and gas royalty, he said the two issues were being “talked and discussed” with the federal government and “some important things are expected soon”.
Governor Ghani said a number of international oil and gas companies were showing interest in Balochistan’s untapped resources and the province would like to acquire shareholding in each petroleum concession agreement, since Balochistan’s financial outcome from Sui field’s royalty was on the decline.
Responding to another question, Mr Ghani said the provincial government was also in discussions with the federal government to retire its expensive cash development loans by taking cheap loans to improve its cash flow position, and the Asian Development Bank was coming forward on this account.
Separately, Balochistan has asked the federal government to reduce the number of federal corporations utilising more than 33 per cent of the country’s total funds so that the province could get its due share for development.
A small Saindak Metals Limited is the only corporation out of total 208 autonomous bodies based in Balochistan, says Ghulam Muhyuddin Marri, chief economist planning in the provincial government.
Mr Marri said the Balochistan government had asked the federal government to extend sea coast jurisdiction from zero to 35 nautical miles to ensure higher income from fishing. The federal government had taken over more than 63 per cent shares of the PPL from the Barmah Oil Company in 1997 to raise its ownership to about 94 per cent. Later, it decided to privatise the company but the Balochistan Assembly adopted a resolution asking the federal government to give its ownership to the province. The centre did not oblige the request.
Last year, the federal government reduced its share in the company by 15 per cent through initial public offering. Now, it plans to sell 51 per cent shares along with management control of the PPL.
Balochistan is currently in a classic debt trap – taking new loans to service old – as its overdraft touched highest ever Rs19 billion this month and interest repayments exceeded Rs250 million per month, arising out of the State Bank of Pakistan’s overdraft and the federal government’s cash development loans. It doles out about Rs3 billion every year in repayments.
