Oil and gas areas to get five percent production bonus

Posted on June 16, 2011. Filed under: Finance, Fossil fuels |

The Ministry of Petroleum and Natural Resources has decided to grant production bonus to those districts where oil and gas reserves have been discovered, according to White Paper 2011-12 of the Government of Khyber Pakhtunkhwa Finance Department.

The funds will be spent through Petroleum Social Development Committees (PSDC) comprising MNAs, chairmen, MPAs tehsil taluka nazims, district nazim members, DCO (Secretary) of the district and two representatives of the exploration and production company member/vice chairman.

Secretary of the PSDC (DSO) will open and administer a joint bank account with the title Petroleum Social Development Fund (PSDF), to be operated by District Co-ordination Officer and the Executive District Officer (EDO) Finance and Planning for the purpose of funding projects identified by the PSDC through the production bonus payable by the E&P company.

All those E&P companies who are obligated to pay production bonus to the government for infrastructure development of the area will deposit the production bonus directly in the bank account of the Secretary (DCO) of the PSDF in consultation with the Director General, Petroleum Concessions (DGPC). The proceeds of first production bonus against Tal black of MOL was $5,00,000 (Rs 29.486 million), which had already been deposited in the account of DCO, Karak and DCO, Hangu during the year of 2008-09.

Second production bonus against the Tal Block of MOL was $1 million (Rs 85.809 million), which had been deposited in the account of DCO Karak and Hangu amounting to Rs 66.963 million and Rs 18.846 million respectively during the financial year 2010-11.

Third bonus, of $1.5 million, may become payable against the said block during next financial year of 2011-12, and will be directly paid by the respective exploration and production (E& P) company to the concerned districts governments under the existing guidelines of productions bonus.

The provincial government has also decided to transfer 5 percent shares of receipts on account of oil and gas receivable from federal government to the respective districts where wellhead of oil and gas are located.

In this connection, report of the committee, headed by KP Chief Secretary, regarding utilisation of 5 percent share has been approved by the provincial cabinet. The said 5 percent share will be over and above the size of District and Provincial ADP and will be utilised on electricity, supply of gas, education, technical education, water supply schemes, roads and health facilities.

Utilisation of 5 percent share in the socio-economic condition of the area. For the financial year of 2010-11 a sum of Rs 25.185 has already been allocated and released to concern Districts–Kohat and Karak–as 5 percent share of royalty on oil, gas excise duty on natural gas and gas development surcharge.

Moreover, the last instalment of Rs 42.071 million is also paid to Sui Northern Gas Pipeline from the provision of 5 percent share from the current financial year for providing gas facilities to the natives of the district Karak and Kohat which has been approved by the Ministry of Petroleum and Natural Resources.

Beside hydel resources, the province of KP has been blessed with large reserves of oil and gas. After 18th amendment, provincial govt has equal share with the federal govt in all the forthcoming production regarding oil and gas.

Keeping in view the Eighteenth amendment, provincial cabinet has given the approval of establishment of oil and gas exploration company. The company will be registered soon with the Securities and Exchange Commission of Pakistan (SECP) and other relevant institutions.

After registration, this company will be like OGDC, MOL and PPL in different blocks. In compliance with the decision of Peshawar High Court under Article 158 of the Constitution, all commercial undertakings, like CNG etc, in the province are exempted from load shedding.

Copyright Business Recorder, 2011


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