Elected representatives, civil society activists, environmentalists and development experts condemned the failure of the oil and gas exploration and producing companies to comply with the Petroleum Concession Agreement (PCA) between the Ministry and the companies in which the companies had been bound to spend money on welfare, employment and training of the people of project areas.
They also expressed concern over the apathetic and poor role of the Federal Ministry of Petroleum and Natural Resources in ensuring proper utilisation of production bonuses for the same purposes.
These issues and concerns were raised during a conference on 'Oil and Gas exploration in Sindh: Issues in Royalty, Production Bonus & CSR' at a hotel in Karachi, which was organised by 'Participatory Development Initiative' (PDI) in support with Oxfam GB. Nisar Ahmed Khuhro, Sardar Ahmed, Madad Ali,, Taj Haider, Jalal Mehmood Shah, Dr Sikander Ali Mendhro, Khalique Junejo, and development experts Naseer Memon, Zulfiqar Halepoto, and host organisation's representative Nasrullah Thahim and Ishak Soomro spoke on the occasion. The conference was also attended by affected communities of Dadu, Thatta, Badin and Hyderabad.
Ishak Soomro Programme officer, Programme Manager, Nasrullah Thahim, Programme Manager at PDI briefed the audience about the existing laws and regulations, licence system, number of oil and gas exploring and producing companies in the country and the state of the local communities with respect to the so-called development activities being carried out by the companies.
They criticised the federal policy of awarding licences to the oil and gas companies. They said that Sindh province produces 56.6 percent and 71 percent of the oil and gas production of Pakistan respectively. However, the oil and gas companies working in the province are largely violating the international and national laws, rules and regulations including corporate social responsibilities (CSR), Petroleum Concession Agreement [PCA], Petroleum Exploration and Production Policy 2007, Pakistan Environmental Protection Act 1997 and other binding laws.
Other speakers said that according to petroleum policy of 2007 as well as Petroleum Concession Agreement (PCA) the oil and gas exploration and production companies have to pay 12.5 percent royalty whereas the local communities in production areas have been deprived of the benefits from the royalty social development. According to the policy and PCA, companies are bound to pay production bonus ranging from $500,000 with the start of commercial production from each field which reaches at $5,000,000 in the case of production reaching to 100-mmboe. This amount is for the development and welfare of the areas deprived arid deserving people, but sadly, these communities have not seen any material and immaterial improvement in their vicinities.
The speakers said that according to the policy, each company has to invest about $25,000 per year on the training of poor local communities to ensure that they have skills to get jobs in the company. And also it has to invest up to $5, 25,000 of amount for the welfare and development of the concession area. But, sadly, there is no monitoring on the implementation of such legal obligations on companies.
They accused the oil and gas companies of not fulfilling their environmental obligations. Initial surveys and seismic operations (blasting and drilling) are being conducted without using the guidelines of the Environmental Protection Act 1997. In the field, disturbance and clearing of vegetation including cutting of trees has been largely reported by the local communities during the seismic operations. The seismic survey during the offshore oil and gas exploration in different areas of Indus Delta, the fisherfolk communities largely complained of heavy blasting during the breeding season of fish and shrimp. Similarly, there have been evidences of leaving the waste and litter in the open after completing the seismic survey by the oil and gas companies.
In many cases, the guidelines of keeping distance of 500 metres between the camp and other human settlements are violated as usually the camps are very near to the human settlements. It is only because the oil and gas companies prefer not to bear the expenses of resettlement of the human population shifting them to any proper place. In district Dadu, Badin many villagers are having eye infections due to being so close to the oil company camps that they are directly affected by the gas flaring from those camps. There have also been issue of land degradation and non-payment of proper land compensation to the owners of the land.
In some cases, the landowners have been paid rent for some months and later on secretly their land ownership documents have been changed claiming the ownership of the oil and gas companies on the same land. This is usually done with the connivance of the local Revenue Department officials. At the end, unanimous resolutions were passed in which it was demanded that:
Billions of rupees outstanding against the oil and gas firms and the federal government in the head of Production Bonus should be immediately spent on infrastructure development of the local oil and gas producing areas of Sindh and for this a decentralised and participatory mechanism should be developed..
Royalty on the oil and gas production should be directly paid to the local oil and gas producing areas for the local social and infrastructure development and decentralised monitoring mechanisms should be developed to ensure that the oil and gas producing areas are receiving proper royalty
Oil and gas firms should be made bound to spend their community development funds exactly on the local communities of the oil and gas producing areas and should not spend the same amount in any other area or sector. They should be made bound to share their community development activities with the provincial and district government as well as the civil society.
Legal framework and implementation mechanisms should be improved to ensure that priority is given to the local communities in unskilled as well as skilled jobs and investments are made for the skill development of the local communities of oil and gas producing areas.
A new Petroleum Exploration and Production Policy should be formed in consultation with the local communities of oil and gas producing areas, their elected representatives, civil society activists, district and provincial governments.
Sindh Oil & Gas Development Corporation be formed. A resolution to this effect unanimously be passed by Sindh Assembly. Henceforth for giving out gas exploration rights, a tripartite agreement between the oil and gas exploration company, Federal Government and respective provincial government be signed. Amount accumulated in production bonus with president be disbursed to provinces in accordance with their due share.-PR