While presiding over a meeting on the Petroleum Policy-2007 the prime minister has said that local bodies functioning in the oil-producing areas should also get 2.5 per cent as royalty. The government is also initiating consultation on how to extend more rights to the provinces. But any initiative will remain superficial unless rights of local communities is recognised over natural resources located in their respective areas.

Oil and gas is a federal subject while these precious resources are found in the provinces, mostly in Sindh and Balochistan. The decision making remains with the federal ministry of petroleum and natural resources, while the Directorate General of Petroleum Concessions issues exploration licenses under the Petroleum Concession Agreements. The provinces are not consulted at any stage at any stage.

The federal government collects all revenues earned from the business and the provinces get 12.5 per cent royalty. However, the petroleum policy does not provide for any share of the royalties going directly to the tahseels/union councils from where these resources are being drilled out.

It is not clear if the share as promised by the prime minister will come out of 12.5 per cent provincial royalty or the federation will give this paltry share from its own oil income, The denial of a fair deal to communities of the wealth generating areas brews unrest and conflicts. Dera Bugti is an example. Communities living in the oil and gas producing areas of Sindh and Balochistan are facing the same socio-environmental injustice.

Balochistan has been catering to the country’s energy needs over five decades, getting very little in return. Today after 56 years of the Sui gas discovery, the province has only 3.4 per cent gas users. Balochis also remain deprived of their share of adequate employment in the areas of gas production and distribution. The Pakistan Petroleum Limited now operating the Sui gas field has only 9.7 and 6.7 per cent Baloch employees in management and non-management cadres, respectively.

Similarly, the gas distribution agency, namely the Sui Southern Gas Company (SSGC) has only 5.8 and 8.2 per cent employees from Balochistan in management and non-management cadres, respectively. The organisation responsible for developing oil and gas reserves—the OGDC—has poor representation from Balochistan —only three and 10.5 per cent Bakoch employees in both the cadres. The denial of benefits to them of their resources has sustained widespread poverty. According a search of the Social Poicy and Decelopment Centre,. 88 per cent the population of the province was under the high deprivation category. If they don’t get the rights over their own natural resources and their only port, how can poverty be removed in the province?

Sindh has also some of the richest oil and gas deposits on its eastern as well as western sandy and hilly strips The provinces have several productive oil, and coal and gas fields. In 2005, Sindh produced 65 per cent oil, 70 per cent gas and 43 per cent coal of the total domestic production, Similarly, in 2006, the province produced 20,369,549 million cubic feet (MCFT) of gas, which was 70 per cent of the of the local production. Sindh consumed only 10,192,560 MCFT which is barely 50 per cent of its gas production.

In 2002-2003, Sindh produced 15.33 million barrels of oil, which amounted to about Rs60 billion. However, these rich resources have benefited the province very little The former minister for petroleum, Amanullah Jadoon told the National Assembly on April 14, that in OGDC, SSGC and SNGPL, Sindh;s share in jobs was only 3,613 (including 1,940 from urban areas) while Balochistan got 353 jobs and Punjab 5,454 jobs. Worse than that, oil and gas producing areas remain completely under-developed. The Human Development Index of the UNDP placed Badeen, a major oil-producing district of the country at 60th out of 91 districts Likewise, only three districts of Sindh (including Karachi and Hyderabad) found place in top thirty districts of country on HDI. The same report placed Rural Sindh lowest among all urban and rural areas of all provinces ranked on HD Index; even lower than rural Balochistan.

SPDC’s annual report of 2001 “Social Development in Pakistan-Growth, Inequity and Poverty” mentions that 50 per cent of districts of Sindh (all from rural Sindh) were in high deprivation category and 49 per cent of rural population was under high deprivation. It is high time that the federation recognises rights of provinces and the communities over their natural resources in their respective provinces and to make them a major beneficiary of the wealth they generate.



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