The 18th Amendment And the Energy Sector of Pakistan (Part 1)

Barrister Aemen Zulfikar MalukaThe dispute between Pakistani Provincial authorities and the Federation regarding the 18th (eighteenth) amendment upon the Constitution of Pakistan has already been creating hindrances in gas and oil exploration activities for the last six years (as of 2016).It is time to rethink our approach to  devolution with half-baked measures, which only serve to paralyse our economy.

No new exploration license continues to be issued since the 18th Amendment was passed six years ago. Many sectors in the Energy and power industry of Pakistan have demanded that the State should review and revisit the impact of the 18th Amendment upon the hydrocarbon licensing. The negative impact of the confusion created in the energy sector by the 18th Amendment has essentially brought it to a depressing halt.

It is also true that a number of foreign firms and investors have left Pakistan due to the constant wrangling between Provinces and the Pakistan federation regarding who will take over the various executive and legislative controls. It has turned into a nasty power game really, where the only loser is Pakistan itself. Recent developments show that there’s been no change in the legislature and executive power even after 18th modification.

The Regulation of Oilfields and Mines and Mineral Development Act of 1948 continues to be in operation and it needs to be understood that, essentially petroleum and gas possession doesn’t confer the executive and legislative power on provinces, despite provisions otherwise for the sharing of royalty. One perspective is that the post-18th amendment scenario has only created new problems in the gas and oil sector. Furthermore these problems are only springing up due to the blatant misinterpretation or mismanagement, as well as the vested interests taking over by the self-interested elements of the provincial and federal bodies overseeing the energy and power sector.

The 18th amendment can’t really be considered a good practice example of devolution and is basically a move of subjects, with the ultimate power center resting with the government. As only specific states pertaining to this list were altered the concurrent list is not abolished completely.

Exactly the same ministries at the provincial Levels also exist in the states. An example is how the existence and the function of the Baluchistan government is a commanding one, particularly with reference to police force, control over natural resources and determining security and political problems. The states of Khyber and Baluchistan Pakhtunkhwa conditionally supported the 1973 Constitution with a guarantee that’s never occurred, although that the concurrent list will be totally abolished within a period of 10 years. Article 158 of the Constitution says that the province has the first right to use up and meet its demands of petroleum and gas before it’s carried to the other states, whereas relating to Article 172-3, the share of the state and the government is 50: 50 for mineral oil and natural gas.

With the government, all sales creating ministries continue to be kept despite the passing of the 18th Amendment and the rest are relocated to the states. One example is that of the ministry of Energy. The states are free to have their very own power generation, but the crucial variable relating to the selection for revenue and tariff collection still rests with the government. That’s not the case, although the mining sector seems to have devolved to the provinces as well. For the gas and oil sector, as per the 18th Amendment, the state has to be consulted before the government takes any choice, although no example of the same has been seen in the past 6 years.

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