QUETTA, June 14: The government of Balochistan is facing serious financial difficulties because of sharp declines in its gas revenue, particularly the Gas Development Surcharge (GDS), over the years.

According to the budget for the current financial year, Balochistan was to get Rs5.3 billion from the GDS but in the revised estimates, it was revised down to Rs4.8 billion.

According to budget projections for the next fiscal year, Balochistan will receive only Rs3.5 billion from the GDS.

This reduction of Rs1.3 billion, official sources said, would be a serious blow to the financial health of the province. It has sent distress signals to the finance department which is assessing its impact on Balochistan’s economy.

“Islamabad has informed the Balochistan government about reduction in the GDS amount for the next financial year,” which, the sources said, would adversely affect the PSDP.

The sources confirmed that the GDS revenue payable by the Sui Northern Gas Pipeline Limited (SNGPL) from Sui (on the basis of well-head prices) alone is around Rs11.6 billion and from Loti and Pir Koh gas fields it is about Rs1.334 billion, a total of Rs12.927 billion.

However, the revenue supposed to be paid to the government of Balochistan from the Sui Southern Gas Company Limited from Sui wells is around Rs1.72 billion. The total revenue for the province, the sources said, should be around Rs14.647 billion keeping in view the well-head prices of the three wells - Sui, Pir Koh and Loti.

At presents the well-head price of gas produced by Sui is Rs51 MMMBTU and that of Loti and Pir Koh gas is Rs80.90 MMMBTU. The maximum and minimum sale prices of gas from Balochistan is Rs189.6 and 248.18 MMMBTU.

If the revenue or energy generated from the Uch gas fields, which exclusively serves the Uch power plant, was taken into account, the GDS should go up to around Rs16 billion a year, the sources added.

The most distressing point, they said, was that the federal government was arbitrarily subsidising the sale of natural gas from Balochistan to consumers in Sindh, NWFP and the Punjab without the consent of elected representatives of the people.

The subsidy for Sindh, they said, was around Rs1.720 billion and for Punjab and the NWFP Rs12.927 billion. Besides, the federal government is giving subsidies to different sectors of economy, also to commercial and industrial concerns owned by private enterprises. The subsidy being given to the fertiliser sector in terms of fuel, amounts to Rs1.054 billion, cement sector Rs34.64 million, fertiliser (feedstock) Rs31.03 million, CNG Rs24.12 million, general industrial sector Rs424.15 million and commercial sector Rs54.67 million.

All the subsidies, the officials said, were being provided at the cost of Balochistan. As a result, the province is left with no funds to finance its annual development programme.