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Money, Money, Money
By M. Ilyas Khan
There is simply no explanation for Islamabad’s refusal to pay Balochistan the royalties that it
merits
One reason why the Marris of Kohlu have been resisting oil and gas exploration in their area is the manner in which Sui’s gas reserves were appropriated by Islamabad. Discovered in 1952, five gas wells at Sui presently supply 38 percent of Pakistan’s domestic and commercial energy needs but only 6 percent of Balochistan’s population has a gas connection. Ironically, these connections came a decade after gas had been supplied all over Pakistan. In fact, had the Zia regime not decided to set up an army corps headquarters in Quetta, there would still be no gas there. The moral of the story? The project to exploit and distribute gas was dominated by Islamabad, which is in turn dominated by the Punjab, and so the gas went where the Punjab wanted it to go. At least this is what the Baloch argue. And there are few convincing counterpoints to their argument.
According to information provided by Kachkol Ali, leader of the opposition in the Balochistan Assembly, state sector gas transmission companies are making annual profits to the tune of 84 billion rupees. Until 1991, when the fist National Finance Commission (NFC) was constituted to divide resources among the provinces, these profits were being devoured by the center. Since then, Balochistan has been the recipient of a meager 5 percent of these profits. During the current fiscal year, the provinces expects to receive a total of 5.96 billion rupees 3.59 billion as its share in the gas development surcharge and 2.37 billion in royalties. In comparison, Sindh, which produces approximately 700 million cubic feet (mcf) of gas as against Balochistan’s 950 mcf, received almost 19 billion rupees. The Punjab, which only produces 250 mcf gas also received nearly two billion in royalties and gas surcharge.
These figures make little sense because the provinces are not paid gas profits at a uniform rate. In terms of gas royalties, the rates allowed to the Punjab vary from 80 to 190 rupees per million British thermal units (BTU), Sindh receive 140 rupees per million (BTU) while Balochistan is paid only 36.65 rupees per million BTU. The share of the province in the income from gas development surcharge also falls low because the surcharge forms part of the federal divisible pool which uses population as the basis for resource distribution among the center (67 percent) and the province (33 percent). Balochistan has a population of only 6.5 million, or 4.5 percent of the national total. Central excise duty on consumer bills also forms part of the divisible pool and Balochistan ends up with a very small share of it.
Among other things, the Baloch leadership has been demanding the distribution of federal resources on the basis of a formula that would account for population as well as the level of development of different provinces in terms of road networks, communication infrastructure, health and education coverage and per capita income levels.
Islamabad has never considered this proposal. There are also no sign of instituting the Senate’s control over the federation’s money matters, another long standing demand of the nationalists.
On the contrary, Islamabad has been resolutely expanding its functions to include even those areas that fall under provincial jurisdiction. Kachkol ali has worked out a list of 270 ministries, division and attached departments having a combined salary bill of six billion rupees per month that fall either in the provincial or concurrent list of powers but have been taken over by Islamabad by suitably tailoring the rules of business for these entities.
The introduction of district Governments has further boosted Islamabad’s leverage over the provincial governments. But while the process of centralization continues unhindered, matters concerning provincial rights seem to have been put off indefinitely. The absence of the new NFC award is forcing smaller provinces to run large budgetary deficits. Balochistan’s case is a particularly difficult one. It will only get 17.5 billion rupees from the federal divisible pool during the current year as compared to 115.22 billion for the Punjab, 47.52 billion for Sindh and 27.76 billion for the Frontier. The provinces are already burdened with federal loans amounting to a whopping 43 billion rupees. In addition, it is running a seven-billion-rupee overdraft with the State Bank.
Given such financial constraints, it is no wonder that successive government in Quetta have failed to develop a province that has a small population but is spread over a huge 211,000 square kilometer area. The irony is that there is considerable wealth buried underneath it. Apart from oil and gas, there is gypsum, chromite, marble, uranium and even gold, silver and copper. Besides, it has some of the richest fishing fields in the Arabian Sea along its 700-kilometer coastline. But there is no water, no agriculture, no industry, no roads, few schools, fewer hospitals, and hardly any remunerative jobs. The choice for nationalists is obvious sit on their riches and act like a dog in the manger until an atmosphere of equity and justice descends from Islamabad.
Herald September 2004 |