PESHAWAR, June 29: The Khyber Pakhtunkhwa government has barred the district governments from executing development projects worth more than Rs1 million from funds transferred to them as share of oil and gas royalty.

In this respect, the provincial government has amended its policy that regulates the yearly transfer of funds from the royalty on oil and gas to districts with oil and gas production units, including Kohat, Karak, and Hangu, according to an official.

“The amendments introduced to the policy will become effective from the start of the financial year 2012-13,” said an official.

The new measures, added the official, had been taken avoid wastage of money on smaller schemes out of the funds transferred to the three districts.

The provincial government has announced to increase the annual share of the three districts to 10 per cent of the royalty on oil and gas transfers received by the province from the centre.

Kohat, Karak, and Hangu -- the three southern districts of Khyber Pakhtunkhwa -- received a total of over Rs828 million in the financial year 2011-12 as their share in on oil and gas royalty, according to an official.

Transfers to the districts in the next financial year would be far more than the amount they received in the 2011-12 fiscal year when their annual share was calculated on the basis of five per cent of the amount received by the provincial government.

The provincial government, said a finance department official, had set up a committee with the chief secretary as its head, assigning it to amend the policy that governed the utilisation of funds transferred to the district governments on account of royalty on oil and gas.

The committee had recommended that the minimum size of a development project -- to be planned out of the royalty on gas and oil money -- should be fixed at Rs1 million, ensuring better utilisation of the public money by the district governments.

“They were planning so many small schemes that carried very little or no economic value,” said the official.

Similarly, the committee recommended that the money transferred under the said head should only be spent on projects including electrification, gas supply, education sector, water supply, roads, health facilities, small dams, and procurement of land for higher education institutions.

Both the recommendations were made part of the official policy and the amendments would be effective from the first day of the new financial year, according to the official.

Official said that the changes had been necessitated to avoid duplication of work as it was found that the district governments were spending the oil and gas money on small developmental schemes identical to the ones funded under the normal annual development programmes of the districts.