ISLAMABAD: The governments of Sindh and Khyber Pakhtunkhwa have moved the Council of Common Interests (CCI) to undo federal government’s decisions on oil and gas that have allegedly encroached upon provincial powers and rights, in violation of the Constitution.

The two provinces are particularly agitated by decisions of the Cabinet Commi­ttee on Energy (CCE), hea­ded by Prime Minister Nawaz Sharif, and the Economic Coordination Committee (ECC) of the Cabinet, headed by Finance Minister Ishaq Dar, regarding the allocation of new oil and gas finds, pricing of natural gas and matters relating to liquefied natural gas (LNG).

A senior official told Dawn that the two provinces had also pointed out that in violation of Article 154 of the Constitution, a meeting of the CCI had not been held for 10 months now. Clause 3 of the article requires that the CCI must meet “at least once in 90 days” or the prime minister may call a meeting at the request of a province on an urgent basis.

Also read: Call for making CCI more effective

The KP has moved for the allocation of 100 million cubic feet per day (MMCFD) of natural gas discovered within its territorial jurisdiction in recent years, and is either already developed or now ready for use.

Provinces take issue with federal cabinet’s unilateral decision-making on matters related to oil and gas

Both provinces have argued that only the CCI had the power to formulate and regulate policies on matters pertaining to Part II of the Federal Legislative List and that they should supervise and control related institutions.

Raziuddin, Chief Execu­tive Officer of the Khyber Pakhtunkhwa Oil and Gas Company Limited (KPOGCL), confirmed that Sindh had moved a reference to the centre and argued that all decisions regarding oil, gas and electricity should be taken as required under the Part-II of the Constitution’s Fourth Schedule.

He said Sindh had moved a case under Article 154 of the Constitution and demanded that all decisions taken by the CCE or ECC regarding electricity, gas and LNG after the 18th Amendment should be “declared null and void” because the province had not supported or had not been consulted at the constitutional forum. Raziuddin said the KP government supported Sindh’s reference and its contents.

However, he said, the law ministry had stated in its legal opinion that LNG was not produced in any province or territorial waters adjacent thereto as required under Article 172 (3) or in the Fourth Schedule of the Constitution. Being an imported product, its allocation or any other matter had nothing to do with any province. “Even the Law Division has consented in its legal opinion that matters relating to natural gas should go to the CCI.”

The two provinces have reportedly prepared their own gas allocation policies for upcoming gas fields by prioritising industrial units, power generation and fertiliser plants, residential areas and CNG stations, in that order.

The two provinces have also raised objections over policy guidelines issued by the ECC to two regulators – Oil and Gas Regulatory Authority (Ogra) and National Electric Power Regulatory Authority (Nepra) – regarding gas and electricity tariffs, saying that the two regulatory bodies themselves fell in the provincial domain through CCI.

Article 154 also requires that CCI decisions must be taken with an expressed majority and a dis-satisfied party could refer the matter to a joint sitting of parliament for correction.

Sindh is perturbed over Ogra decisions taken earlier this month on gas pricing. While deciding the final revenue requirements of the two gas utilities – Sui Northern and Sui Southern – for FY2012-13 and FY2013-14, Ogra virtually wiped out around Rs18 billion gas development surcharge, particularly affecting Sindh because of its 70 per cent share in gas production. Ogra’s decisions were based on the policy directives of the ECC.

On the other hand, KPK has the biggest contribution (around 43 per cent) in the country’s domestic oil production, followed by Sindh at around 40 per cent.

Sindh is also agitating for changes in the gas consumer price mechanism in general and a dismantling of the decade-old production agreement with Mari Gas.

Published in Dawn, November 23rd, 2015