ISLAMABAD: When the 18th amendment is passed, the provinces will get a lion's share of half of the total profit on natural resources immediately on new explorations and gradually on the existing ones in due course of time, but there is no study yet of how much revenue loss the Centre will have to face. The Centre, presently enjoying full fiscal benefits, will lose 50 per cent revenue collection on the natural resources explored from the provinces but no one has yet put a dollar figure on this calculation, explain finance managers and members of the Raza Rabbani committee. The panel members and experts believe that the Centre will also have to involve the respective province on equal basis while signing new explorations or reviving the existing agreements. The first such agreement expires in December this year.
"The only option the central government has is to immediately start reducing its expenditures to avoid problems," said a former advisor to prime minister on finance Dr Salman Shah, when contacted to discuss the coming situation.
Dr. Salman, the committee members and one of finance ministry officials expressed their inability to determine quarterly, half yearly or yearly financial cutbacks in revenues after parliamentary approval of the 18th amendment.
The finance ministry official said a process to work out assessments has yet not been initiated, as profit on fresh explorations will be simply divided equally between the centre and the province.
"Natural gas exploration agreements will start expiring in Balochistan from coming December (2010) onwards and definitely the relevant province will be the beneficiary in fiscal terms."
Dr Salman Shah said the losses to the federal government in revenue collection and other implications in practical terms will be solved with the passage of time. "The Centre and the provinces will more actively focus on new explorations."
As far as the figures are concerned, he said it depends on how much explorations are made and how many existing agreements are at revival stage. "Although the federation has Rs300-400 billion per annum its own revenue yet it is imperative to initiate steps for slashing expenditures to meet fiscal requirements," he added.
The members, particularly from smaller provinces, with whom this correspondent talked, said 100 per cent provincial autonomy could be achieved with one or two more amendments. "Fifty per cent one-jump gain is itself a big success."
"There are many exploration accords in Balochistan that have different dates of expiry and the new ones will be made through equal weightage of our province and the Centre," said JWP Senator Shahid Bugti, a member of the Rabbani committee.
ANP senior vice president Haji Adeel said the amendment's natural resources clauses would provide equal partnership of Centre and a province. "Not only smaller but all the federating units will enjoy the fruits of the amendment with royalty intact."
Article 172, which deals with these resources, would be amended under the 18th amendment bill formally laid down by Senator Raza Rabbani before Parliament.
"(3)Subject to the existing commitments and obligations, mineral oil and natural gas within the province or territorial waters adjacent thereto shall vest jointly and equally in that Province and Federal Government," is the exact wording of to-be-amended Article 172 titled "Ownership Property"
This article's clause (2), which is also being amended, reads: "All lands, minerals and other things of value within the continental shelf or underlying the ocean within the territorial waters of Pakistan shall vest in the Federal Government." The word ‘within' occurring secondly will be replaced with ‘beyond' under 18th amendment.
Shahid Bugti, JWP senator, said the provinces would have joint control and equal share over the oil and gas explorations. "This step will have a far-reaching impact on financial health of provinces as existing accords will also expire today or tomorrow."
The JWP senator said the financial impact could not be calculated right now but provincial authorities would be in a position to get more and more with the passage of time particularly when the stage to renew agreements arrives.
"We, our party, stand for complete provincial autonomy though we have substantially achieved in the form of 18th amendment with immediate relief of 50 per cent."
He maintained that the centre had exclusive rights over ports and the adjacent oceans but the 18th amendment will put this item of Federal Legislative List to second list bringing the subject under purview of the Council of Common Interest (CCI). "You know PM is chairman and four CMs are CCI members."
Haji Adeel said that a contract signing company would have sole right over the management control after reaching an agreement.
"The provinces' involvement will be up to the agreements, renewal of agreements and the profit sharing with Centre equally while the exploration company will have administrative control," he elaborated.
Writer: By Dilshad Azeem
http://www.thenews.com.pk/daily_detail.asp?id=233417
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