Why Sindh’s share in Oil & Gas royalty reduced?

questby: Ahmed Mushtaq

Sindh to suffer Rs. 7.78 billion losses over royalty transfers in new Budget

Mohison Babar, Islamabad based journalist, in his latest article in Sindhi Daily “Kawish” has disclosed that Sindh’s share from Gas and Oil royalty is being reduced since a year. In new fiscal year 2009-10 further slash is estimated in the budget documents of the federal government.

The writer has rightly urged Provincial Government to seek an inquiry into the matter. There has to be an explanation, what grounds this reduction, has the production went down or the economic cost of gas & oil production gone up, what has really caused this reduction. Unless government explains its position suspicion and questions are natural to be raised.

Mr. Mohsin based on budget papers, referring to the provincial transfers from federal government says “For outgoing fiscal year 2008-09 Rs 14.8 billion oil royalties was estimated and Rs 30.5 billion for Gas but new fiscal year 2009-10 royalty for oil is reduced Rs. 7.8 billion while for gas it is estimated 26.5 billion.”

Sindh produces 56% of oil and 77% of gas in total production in country. Under new estimations Sindh will get Rs. 3.9 billion (contrary to outgoing years’ Rs. 8.5 billion) on oil and Rs 18.12 billion on gas (contrary to Rs 21.3 billion). In total Sindh will suffer a net loss of Rs 7.78 billion in royalty transfers on gas and oil.

The writer can be reached at:  mrajpar@yahoo.com

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