ISLAMABAD: The Supreme Court expressed on Wednesday displeasure over disregard of contractual obligations and neglect of social sector development by oil and gas exploration companies operating in Sanghar district of Sindh.

A three-judge bench, headed by Chief Justice Iftikhar Muhammad Chaudhry, had taken notice on complaints by Taluka Bar Association president Abdul Hakeem Khoso and Advocate Anwar Nizamani about environmental pollution, a dilapidated road infrastructure because of movements of heavy machinery and lack of social sector development in exploration areas, especially Sanghar.

“There is a dire need of schools and basic health units. Although the money is available, it is not being spent,” regretted Justice Jawwad S. Khawaja, a member of the bench.

Petroleum Concessions Director General Saadullah Shah informed the court that against nine exploration and production licences, four companies — United Energy (Pvt) Ltd, Oil and Gas Development Company Limited, Pakistan Petroleum Limited and Petroleum Exploration — were working in Sanghar.

“Under the concession licence, each company is obliged to invest $30,000 (Rs3 million) annually per block. There are nine exploration blocks in Sanghar,” the DG said, adding that there was an outstanding amount of $1.3 million to be spent on the social sector development in the district alone.

During the hearing, none of the companies could explain how much money they had actually spent on social sectors like health, education, water supply, drainage, road and transportation and provision of gas to surrounding areas.

Saadullah Shah said 4,400 barrels of crude oil and 60 million cubit feet of gas were being produced daily in Sanghar.

Additional Advocate General Shah Khawar read out a report on behalf of the OGDCL and the petroleum ministry conceded that much attention could not be paid to the development sector. But the main reason for the unspent mandatory welfare budget was non-identification of development scheme by local administrations and public representatives, including member of the National Assembly, it explained.

The OGDCL, however, ensured prompt release of funds as soon as welfare schemes were communicated to it.

The corporation admitted that exploration and production (E&P) companies were required under the petroleum concession agreement to spend a fixed amount on welfare schemes and deposit bonus at the time of commencement of commercial production, which was linked with barrels of oil equivalent (BOE).

“The E&P companies are also required to ensure environmental protection,” the petroleum ministry said, adding that 25 exploration and production companies working in different fields across the country had been asked through letters to provide complete information about their welfare obligations as per agreements. The companies have also been asked to mention the amount being spent on development of roads and infrastructure and induction of skilled and unskilled employees.

Abdul Hakeem Khoso regretted that nothing had been spent on the ground and that local people were being killed because of snake and dog bites, but no medical facility was available to them.

The court directed the four E&P companies to submit a year-wise report showing how much money they had spent and how much was outstanding.

The case will be taken up on Thursday.