PESHAWAR, March 17: The Frontier government expects to generate more revenue from royalty on oil and gas as compared to the amount projected in the budget for 2006-07, officials say.

Cumulatively, the government expects a revenue of slightly over Rs1.74 billion — which is about 25 per cent more than the receipts for 2005-06 — under the heads of oil and gas royalties, gas development surcharge and excise duty.

“Augmentation in the revenue is mainly because of the continuous increase in production from the existing three wells of natural gas and crude oil in the province,” officials of the finance department told Dawn.

They said the actual revenue would almost double by the end of the current fiscal because of the surge in overall oil and gas production. “This will provide more fiscal space to the cash-strapped province, which is heavily dependent on fiscal transfers from the federal government,” the officials explained.

The government in the current budget had put the estimated receipts at Rs892.68 million and Rs503.91 million as royalty on crude oil and natural gas respectively followed by Rs320.54 million as GDS and Rs27.56 million as excise duty on natural gas.

In 2005-06, the provincial government had projected receipts at Rs559.59 million, while the actual collection stood at Rs1.3 billion by year-end, showing an increase of 133 per cent.

The provincial government’s income has been increasing under this head for the past couple of years and the trend will continue because more wells would become operational in future.

Sources said the petroleum ministry had awarded 22 oil and gas exploration licences in southern districts of the NWFP, where huge reserves were believed to exist.

The three operational oil and gas fields are located at Chanda (Shakardara-Kohat), Manzalai (Karak) and Makori (Karak). Regular production from

Chanda fields started on July 2004, Manzalai field in January 2005 and Makori in January 2006.

Dawn learnt that the provincial government also had reservations over the formula, which determined the ratio of royalty and wanted the same to be revised.

“A senior official of the finance department has been assigned to review and rationalise the existing formula because presently the province has no role in determining the royalty on oil and gas,” an official said.