Ministry grants production bonus


Ministry of Petroleum and Natural Resources has decided to grant production bonus to those districts where oil and gas reserves have been discovered, the White Paper 2011-12 of the Finance Department Government of Khyber Pakhtunkhwa for development. The funds will be allocated through Petroleum’s Social Development Committees (PSDC) comprising MNAs Chairmen, Tehsil Taluka Nazims MPAs, district Nazim members, DCO (Secretary) of the district and two representative of the Exploration and Production (E&P) Company Member/ Vice Chairman.

Secretary of the PSDC (DSO) will open and administer a joint bank account with the title Petroleum’s Social Development Fund (PSDF), to be operated by District Coordination 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 exploration and production (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 $500,000 (Rs29.486 million), which had already been deposited in the account of DCO Karak and DCO Hangu during 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 Rs66.963 million and Rs18.846 million respectively during Financial Year 2010-11.

The third bonus of $1.5 million may become payable against the block during next the financial year of 2011- 12 and will be directly paid by respective Exploration and Production (E& P ) company to the concerned Districts Governments under the existing guidelines of productions bonus. Provincial Government has also decided to transfer five per cent shares of receipts on account of Oil and Gas receivable from Federal Government to the respective districts where the wellheads are located.

In this regard, a report of the committee headed by the Chief Secretary, KPK regarding utilisation of five per sent share has been approved by the Provincial Cabinet. The five per sent share will be over and above the size of District and Provincial ADP and will be utilized on Electricity, Supply of Gas, Education, Technical Education, Water Supply Schemes, Roads and Health facilities. Utilisation of five per cent share in the socio-economic condition of the area. For the financial year of 2010-11 a sum of Rs.225.185 has already been allocated and released to concern Districts i.e. Kohat and Karak as 5 per sent share of royalty on oil, gas Excise Duty on Natural Gas and Gas Development Surcharge.

Moreover the last installment of Rs42.071 million is also paid to Sui Northern Gas Pipeline from the provision of five per cent share from the current financial year for providing, gas facilities to the natives of the district Karak and Kohat which has approved by the Ministry of Petroleum and Natural Resources of the Federal Government. Beside Hydroelectric resources, the Province of KPK has been blessed with large reserves of Oil and Gas.

After 18th amendment Provincial Govt. has equal share with the Federal Government in all the forth coming 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 Security Exchange Commission of Pakistan and other relevant institutions.

After registration this company will be such as OGDCL, MOL and PPL in different blocks. In compliance with the decision of Peshawar High Court under Article 158 of the Constitution of Islamic Republic of Pakistan, all the commercial undertakings like CNG etc in the Province are exempted from loadshedding.

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