ISLAMABAD: The provinces are seeking the implementation of powers, granted to them under the 18th Amendment, to exercise joint, equal and individual control over oil, gas and mineral reserves inside their respective boundaries, and want a review of the federal government’s petroleum policy that they claim is ‘stagnating investments’.

A senior federal government official told Dawn that the four provinces were jointly pushing the federal government for implementation of Article 172(3) of the Constitution, and would like the Council of Common Interests (CCI) to take a decision at its forthcoming meeting.

The subject is expected to be first taken up for consensus at a meeting of the Inter-Provincial Coordination Committee (IPCC) on Tuesday, which will also discuss provincial complaints against the Centre for alleged violation of certain constitutional provisions, the LNG policy and gas sector reforms.

The provinces, particularly Sindh, Khyber Pakhtunkhwa and Balochistan — the three richest in oil and gas deposits —are unhappy that not a single exploration block has been offered for bidding for over four years under the 2012 petroleum policy.

In a summary moved to the CCI and IPCC, the provinces have also sought powers to offer fresh oil and gas exploration blocks to investors at the provincial level, arguing that the 2012 policy was up for review, as section V clause 12.5 of the policy clearly stated that “this policy may be reviewed by government of Pakistan after 5 years”.

Seek revamp of 2012 petroleum policy

The provinces argue that Article 172(3) of the Constitution, as revised under the 18th Amendment, stated that “mineral oil and natural gas within the province or the territorial waters adjacent thereto shall vest jointly and equally in that province and the federal government”, subject to existing commitments and obligations.

But this clause could not be implemented, even though the 2012 petroleum policy was approved by the CCI, which also delineated procedures and forums moving forward.

A board was agreed upon as a regulatory forum, where four representatives of the provinces would sit with director general of petroleum concessions (DGPC) of the federal petroleum ministry and decide fresh biddings for exploration and production licences.

All the four provinces sent their nominees to the Centre to activate the board and identify fresh blocks for bidding, but no meeting of the board was convened. The federal government did not even pay salaries to the provincial members, as required on the pattern of two other regulators — Oil and Gas Regulatory Authority and National Electric Power Regulatory Authority.

Disappointed, Sindh and Punjab recalled their members, while Balochistan and KP remained steadfast, even though their members remained unpaid for over three years.

The three provinces have now formally demanded that oil and gas exploration should be revived, saying that a five-year gap in exploiting new blocks could have longstanding repercussions. They allege that key players at the Centre are intentionally holding back on domestic exploration to pave the way for imported LNG.

The provinces have demanded that some responsibilities should also be given to them, such as testing, surveys for hydrocarbon prospects and then going for bidding and award.

They have proposed to empower provincial energy departments on the pattern of the DGPC to act in tandem with the federal government holding company to share fresh oil and gas finds equally and jointly.

They believe that the prospects identified by the provincial departments should be offered for bidding and licensed by them. If a nearby underground oil and gas system was identified, it should be handled by the federal government.

The provinces have also opposed the unbundling of the gas sector, along the lines of the power sector, which they say has created more problems than it has solved.

The provinces also have grievances against the Centre over the non-implementation of Articles 154 and 158 of the Constitution, which will also be taken up by the IPCC, led by IPC Minister Riaz Hussain Pirzada.

Sindh feels particularly aggrieved as it was producing more than 68pc of the country’s natural gas, but was being provided only 44pc, even though the province was facing an acute gas shortage.

Published in Dawn, September 18th, 2017