The NWFP government is setting up a separate energy department for exploitation of its potentials in hydropower generation and recently discovered oil and gas deposits.

Approved by the ANP-led coalition government, the department will be functional by the end of current financial year, says an official.

The proposal for a separate entity is to bring coherence in government policies for exploitation of abundant natural resources in the province.

The natural resource development has been one of the most neglected areas in NWFP, as neither federal nor provincial government ever paid any heed to optimise its exploitation. The hydropower potential of the province is 28,000 MW of which only 3945 MW has been exploited. Its management has always been based on ad-hocism in absence of an effective system.

It was only in 1986 that the Small Hydro Development Organisation (SHYDO) was created to develop small scale hydropower projects.

No major breakthrough was achieved as the output of SHYDO was confined to preparation of feasibility studies and construction of few small power units.

This organisation was later on converted as an autonomous Sarhad Hydro Development Organisation (SHYDO) in 1993. It now works as prime agency for identifying and executing uplift projects in the power sector.

An eight-member board of directors under the chairmanship of the governor NWFP manages SHYDO. It is hydropower prospector, developer and facilitator for private investment.

SHYDO has prepared a master plan, which consists of an identification study on seven regions of NWFP. Initially a total potential of about 400 MW, comprising of 67 ‘small’ sites identified in Chitral, Dir, Swat, Mansehra and Kohistan SHYDO has also identified five bigger sites with a total capacity of 5000 MW in the same areas besides completing feasibility studies of nine projects.

Since its creation, SHYDO created projects with a total capacity 3600 KW which are in operation. While 81 MW Malakand -III HPP, Dargai is under construction.

Numan Wazir, an industrialist says, the creation of a full-fledged entity for exploitation of natural resources for economic benefits is need of the hour, but it should not be turned into another’white-elephant’ to be fed from the provincial kitty.

The proposed energy department, he suggests, should act as an umbrella body overseeing the overall functioning of SHYDO and everything relating to the hydro power generation.

He further proposes: “It should be an autonomous entity having representation from public, private and stakeholders in policy formulation.

Apart from hydropower potentials, the NWFP is also blessed with huge deposits of oil and gas. So far oil and gas reserves have been found in its southern parts including District Kohat and District Karak.

Commercial production in District Kohat at Shakardara (Chanda) oil/gas fields started in July, 2004. After that more oil/gas fields were found at Manzalai and Makori in District Karak and commercial production started from these fields in January, 2005 and 2006 respectively.

At the moment, around 225,591 square kilometer area is under exploration of oil and gas countrywide out of which 11,396 square kilometer i.e.5.1 per cent is in NWFP.

Oil and Gas sites in NWFP falls in the Potwar Region, where almost all-major oil fields of the Northern region including Chanda, Tal block and the recently discovered Nashpa oil and gas reserves are situated. This has created an atmosphere of competition for fresh exploration leases in the area.

Tal block has the estimated gas reserves of 2.56 trillion cubic feet and oil reserves of 58.6 million barrels which has an estimated life of about 178 years for oil and 117 years for natural gas.

The recently discovered oil and gas reserves at Nashpa block with oil flow of 4,100 barrels per day and 12 million cubic feet per day of gas is another significant discovery in the Potwar region.

The oil and gas exploration has opened another avenue for resource mobilisation for the cash-strapped NWFP government, as its royalty is on the rise.

For example, in year 2004-05 it received Rs487.271 on account of royalty, which reached Rs4.150 billion in last financial year. In current fiscal year the estimated collection of Rs4.429 billion that is expected to be surpassed.

Despite having such huge potential, the provincial government has no organisation to look after and oversee the ongoing development in this important area, as only the OGDC and ministry of petroleum are the entities undertaking the same job. “Creation of a department which will also oversee the oil and gas, is inevitable because these are the resources of the future,” says Ghulam Sarwar Mohmand, a leading entrepreneur based in Peshawar. He suggests that the proposed department should have technical people on board with maximum independence.

The government usually sets up organisations to accommodate their blue-eyed, so the proposed body should be free of all kind of political interferences and involvement of private sector should be encouraged, remarks Mr Mohmand. “First of all the government should invite the stakeholders and do its homework to identify its goals and objectives to be achieved through setting up a separate entity for handling province’s natural resources,” he concludes.