ISLAMABAD: For the first time the Balochistan government will get an amount of $500,000 as production bonus from a petroleum exploration and production (E&P) company under social welfare obligation for development of local communities.

The information was shared with a three-judge Supreme Court bench, headed by Justice Jawwad S. Khawaja, on Wednesday.

So pleased was Justice Khawaja with the information that he promptly congratulated Justice Qazi Faez Isa, a member of the bench who was recently elevated to the Supreme Court after having served as chief justice of the Balochistan High Court.

The bench had taken up a case relating to implementation of the court’s Dec 27, 2013, order on environmental pollution and dilapidated road infrastructure because of movement of heavy machinery and lack of corporate social responsibility in exploration areas, especially in Sanghar district of Sindh.

Talking to Dawn, the deputy director of Balochistan’s energy department, Abdul Qadoos Khan, said the production bonus would be given by Mari Petroleum Company. The company is currently producing 22 to 25 million standard cubic feet per day of natural gas from the Zarghoon exploration block in Quetta district. The plant was inaugurated on Aug 14 this year.

There are six exploration blocks in Balochistan, including Zarghoon, Sui, Jhal Magsi and Pir Koh.

According to concession licences, an oil and gas expl­oration company is obliged to invest $30,000 in a block per year in the country.

Abdul Qadoos said the Balochistan government had so far received Rs100m from different production companies under their social welfare obligation. He said such funds were earlier routed through the federal government but after the 18th Amendment, the provinces could now directly get these from the companies for the uplift of local communities.

In its Dec 27 verdict, the Supreme Court had directed the federal, provincial and local governments to ensure that substantial funds were made available in respect of production bonuses and marine research fees. They were asked to prepare a comprehensive account of the funds under the heads of social welfare obligation and royalties due to the districts where the companies were exploring oil or gas.

As a result of the judgment, a staggering amount of Rs780 billion was contributed by the E&P companies under the social welfare obligation. The money is available with the federal and provincial governments, but could not be utilised effectively because of the failure of the provincial authorities to finalise a mechanism for its transparent distribution.

At the last hearing on June 19, the bench was informed by the Director General of Petroleum Concessions, Saeedullah Shah, that the country would surpass the production target of 100,000 barrels of oil per day by the end of June after 5,500 barrels from recently discovered oil reserves near Jhelum, in Punjab, was added to the system.

The total oil production then stood at about 90,000 barrels per day.

On Wednesday, Khyber Pakhtunkhwa’s IT consultant Amir Zafar informed the court that a management information system (MIS) software had been developed for the utilisation of funds under welfare obligation.

The software will display yearly and accumulative details of different funds received and spent on various projects by every district in KP on account of production bonus, social welfare obligations and royalty.

The software can trace schemes carried out through the production bonus like health and education, a report submitted by KP said.

The court asked the other three provinces to develop a similar MIS software. It regretted that despite the collection of huge funds, not a single penny had been utilised for the development of exploration areas. “Roads are still in a dilapidated condition, hospitals are without any facility and people are still queuing for potable water.”

Published in Dawn, October 23rd, 2014