ISLAMABAD: The Supreme Court was informed on Monday that the federal government had credited an amount of Rs67.6 billion to Punjab since 1989 on account of royalty on crude oil and natural gas. Out of this amount released up to August this year, Rs32.3bn was allocated for eight districts under the Annual Development Programme (ADP) during the current fiscal year.

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

Also read: Ecological degradation irks Supreme Court

At the last hearing on Oct 14, a three-judge SC bench headed by Chief Justice Anwar Zaheer Jamali had expressed dismay over provincial governments’ lack of interest in spending funds amounting to billions of rupees allocated for the wellbeing of people under different heads like education, health and road networks.

It had asked them to submit comprehensive reports specifying monitoring mechanism for utilisation of the amount spent on projects under the heads of production bonus and the preference of each province for the uplift of local communities.

A report submitted by Additional Attorney General of Punjab Razzaq A. Mirza on behalf of the provincial energy secretary said that under Article 161(1) of the constitution, the federal government collected royalty on oil and gas from exploration and production (E&P) companies and then disbursed it to the provinces where the wellhead for exploring oil and gas was situated.

The royalty provided by the federal government, the report said, was being spent under the ADP on eight districts producing crude oil and gas – Dera Ghazi Khan, Chakwal, Attock, Jhang, Mianwali, Rahimyar Khan, Rajanpur and Rawalpindi.

About social welfare obligation, the report said the total receipt under this head was Rs278 .6 million of which Rs17.8m had been spent on different communal projects in line with social guidelines of 2014 whereas Rs260.7m was available in joint accounts for a number of schemes which were at approval stage.

According to the guidelines issued by the petroleum and natural resources ministry’s Director General Petroleum Concessions (DGPC), the funds should be spent on specific sectors like health, education, water supply and drainage in areas which are under exploration stage.

The schemes under the social welfare funds are to be prepared by the E&P companies in consultation with the local administration. The district governments are responsible for monitoring the schemes at the level of DCO/DCs.

According to the latest statement, the report said, the total share of Punjab as provided by the DGPC was $8,020,467 of which $3,611,911 had been spent by the E&P companies while they had yet to pay $758,347 to the districts.

Under the production bonus which has to be spent within the drilling areas under the 2012 petroleum policy, the DGPC has transferred Rs244.9m to the joint accounts of DCO and EDOs of the eight districts in Punjab where crude oil and natural gas are being produced.

Out of this Rs244.9m, the district governments have spent Rs169m on different social schemes whereas Rs75.8m is available for other schemes which have been identified and will be launched after approval by the quarters concerned.

The report said that licences had been issued to 12 E&P companies in 23 districts of Punjab for exploring crude oil and gas.

Published in Dawn, December 1st, 2015