KARACHI, June 19: Balochistan leadership hopes to receive about Rs50 billion from the federal government next fiscal year. They also expect to get some concessions on servicing of State Bank’s overdraft now being converted into a soft loan.

The federal government is also expected to show leniency in recovery of federal government cash development loans. Some foreign funds are also in the pipeline to help Balochistan government prepare Rs65 to Rs70 billion budget for next fiscal year.

“Unlike three other provinces, Balochistan does not have enough resources to take up the exercise of making a budget for next fiscal year,” Prime Minister Yousuf Raza Gilani informed a meeting of public opinion leaders and social activists in Islamabad recently after he had held a detailed meeting with Balochistan Chief Minister Nawab Raisani and his several cabinet colleagues on Tuesday.

In the outgoing fiscal year 2007-08, the Balochistan government presented Rs63 billion budget with Rs13 billion plus annual development funds. More than Rs10 billion of the 2006-07 budget were unfunded.

Following a meeting on Tuesday with Balochistan chief minister, the prime minister announced addition of Rs3 billion in the royalty payment on oil and gas to the province plus one billion more from what Mr Gilani said prime minister’s fund to help the provincial government begin its budget making exercise.

Repeated calls made to Balochistan secretariat on Wednesday and Thursday revealed that the relevant officials were engaged in budget making process after getting an assurance from the prime minister and from the 2008-09 federal budget that indicates availability of about Rs45 to Rs50 billion.

The documents of federal budget for 2008-09 show Balochistan’s share of Rs20 billion in the federal divisible pool of taxes. Total provincial share in this federal divisible pool of taxes is Rs505.70 billion from which Balochistan gets only 5.11 per cent.

Balochistan is getting more than Rs10 billion as straight transfers of its shares in oil and gas related revenue. The federal budget documents show Rs5 million royalty on crude oil, Rs2.92 billion royalty on natural gas, Rs4.66 billion on gas development surcharge and Rs2.15 billion from excise duty on natural gas.

A small amount of Rs275.42 million is indicated as Balochistan’s share in the provincial GST. More than Rs10 billion is expected to be given from special subvention fund.

For last several years, Balochistan has been consistently disputing federal government’s methodology of calculating wellhead value of Sui gas to assess royalty on gas. “Due to this anomaly in valuation, the province is losing roughly Rs3.6 to Rs4.5 billion every year,” argues a Balochistan White Paper.

The prime minister was apparently convinced by the argument of Balochistan chief minister and his cabinet colleagues on Tuesday and offered a partial consolation, which is a mere fraction of total outstanding amount being demanded by the province.

“Sui gas field has sustained energy economy of Pakistan for last more than 50 years,” Balochistan government’s paper declares adding that the Sui gas field is now fast depleting and its production is declining, which is also reducing the royalty value.

Sources in Balochistan say that late Nawab Akbar Bugti had given a claim of Rs800 billion royalty on Sui gas outstanding for more than 50 years.

The Balochistan government has serious dispute on assessment of its share in gas development surcharge. The paper alleges that according to the current method of calculating gas development surcharge, where Balochistan gas (having low wellhead price) is mixed with high priced gas from Punjab and Sindh, the Balochistan gas is being used to subsidise consumers in Punjab, Sindh and NWFP to the tune of Rs14.6 billion a year.

The Sindh government has, however, contested Balochistan’s stand on this issue and it contends that Sindh is at present the biggest producer of gas. This gas is being consumed mostly within the province that involves least transmission cost.

“But there should be no doubt that since very long, from 1954 onward, Sindh like Punjab and NWFP depended entirely on Sui gas to keep its kitchen fires burning and its industry wheel running,” a senior leader of Karachi Chamber of Commerce and Industry remarked.

Political activists and many others have proposed the institution of a special Balochistan Endowment Fund, in which the federal government and governments of Sindh and Punjab should contribute for investment in social sectors and infrastructure development in Balochistan.

The private sector of Sindh and Punjab should also contribute in such a fund to compensate for more than half a century of exploitation of Balochistan.