Senate Panel Seeks 20-Year Gas Royalty Record
A Senate sub-committee has asked oil and gas companies to produce a 20-year gas royalty record, after finding that the figures supplied so far do not show whether provinces received what they were owed, The Express Tribune reported.
The sub-committee of the Senate Standing Committee on Petroleum, chaired by Senator Jam Saifullah Dharejo, met at the Sui Southern Gas Company (SSGC) office in Karachi on Friday. It directed the Petroleum Ministry and Sindh government departments to furnish complete royalty details at its next meeting.
OGDCL criticised over 10-year figures
The committee expressed dissatisfaction with the Oil and Gas Development Company Limited (OGDCL). The state-owned explorer had submitted only aggregate royalty payments covering 10 years, with no link between production volumes and the money paid.
Dharejo directed the company to provide year-wise production figures and the matching royalty calculations through its chief financial officer, going back to 1995, when it began operating in the area.
Without production figures, the committee cannot check whether payments matched output.
Production bonuses and the Sinjhoro exemption
Senator Quratulain Marri questioned why OGDCL had not paid production bonuses. An OGDCL representative told the meeting that the Directorate General of Petroleum Concessions (DGPC) had exempted fields producing between 1990 and 1993, while the company had paid bonuses on fields discovered later.
The representative said the exemption applied to OGDCL’s Sinjhoro Block in Sanghar, under a concession agreement signed in 1997, and did not extend to other companies.
Dharejo also asked the DGPC how royalties are calculated, where payments go and whether production figures are independently audited. He described production bonuses as a form of corporate social responsibility that could support schools, hospitals and other public services in areas affected by exploration.
How gas royalties reach the provinces
A DGPC representative told the panel that the royalty rate stands at 12.5 per cent. Companies deposit their payments into the federal government’s account.
The Finance Division deducts 2 per cent as collection charges. It then transfers the remaining amount to the relevant province within 15 days, according to the province’s share.
The official said the DGPC calculates royalties every month, conducts audits, and would submit a detailed review report with royalty figures for the past 15 years.
The figures will test a long-running complaint from producing provinces: that they see too little of the wealth extracted from their soil. Sindh hosts some of the country’s oldest gas fields, yet nearby communities still report poor roads, water shortages and few jobs.
Local jobs in Tando Allah Yar
MNA Zulfiqar Sattar Bachani told the panel that United Energy Petroleum and OGDCL were exploring in Tando Allah Yar, with wells within a five-kilometre radius, but no survey had been conducted.
He called for local residents to get preference in lower-level jobs, and Dharejo directed the ministry to enforce local recruitment laws, particularly for non-technical posts.
A ministry official said local people were given preference for non-technical jobs and training through corporate social responsibility programmes. OGDCL had funded such work since 2019, and Mari Energies and other companies also contributed to a social welfare fund.
Gas royalty record: why the scrutiny matters now
The scrutiny comes as Pakistan prepares to revive offshore exploration after nearly two decades. A Turkish seismic vessel is due in Karachi between November 17 and 20 to begin surveying 40 offshore blocks in the Indus and Makran basins.
Fresh exploration will only help producing regions if the royalty system works. The committee’s demand is a test of that system, and its next meeting will show whether the ministry and OGDCL can produce the numbers.
Energy costs remain a live issue. Nepra raised the industrial tariff to Rs25.30 per unit this week, despite dissent from two members. A debate over tariff cuts is also under way, with industry warning that high duties hurt competitiveness.
Frequently asked questions
What did the Senate panel ask for?
It asked for a 20-year breakdown of royalty payments to provincial governments, with production figures and royalty calculations going back to 1995.
Why was OGDCL criticised?
OGDCL submitted only aggregate royalty payments for 10 years, without showing how the payments related to production volumes. The committee said it could not verify whether provinces were paid correctly without year-wise production data.
What is the gas royalty rate in Pakistan?
The royalty rate is 12.5 per cent. Companies deposit payments into the federal government’s account, the Finance Division deducts 2 per cent as collection charges, and the rest reaches the relevant province within 15 days.
What happens next?
The Petroleum Ministry and Sindh departments must furnish complete records at the next meeting, and the DGPC has promised a review report with 15 years of royalty figures.
