PROVINCIAL SOVEREIGNTY IMPACT ANALYSIS
KP MINERALS BILL 2025

EXECUTIVE SUMMARY

This analysis examines the impact of the KP Minerals Bill 2025 on provincial sovereignty, with particular focus on the 18th Amendment's provisions relating to mineral rights. Our findings indicate that the bill represents a significant erosion of provincial authority through procedural mechanisms that effectively recentralize control while maintaining the appearance of provincial autonomy.

1. CONTEXT: THE 18TH AMENDMENT AND PROVINCIAL RIGHTS

The 18th Amendment to the Constitution of Pakistan, passed in 2010, was intended to strengthen federalism by devolving significant powers to the provinces. Article 172(3) established that "mineral oil and natural gas within the Province or the territorial waters adjacent thereto shall vest jointly and equally in that Province and the Federal Government." This constitutional provision was meant to ensure provinces had meaningful control over their natural resources.

However, the KP Minerals Bill 2025 effectively undermines this constitutional guarantee through administrative and procedural mechanisms that:

1. Create federal veto points throughout the licensing process 
2. Establish parallel federal regulatory structures that supersede provincial authority
3. Allow federal authorities to designate "strategic minerals" with minimal provincial input
4. Impose federal environmental standards that preempt provincial environmental management

2. SPECIFIC PROVISIONS UNDERMINING PROVINCIAL SOVEREIGNTY

2.1 Federal Control Mechanisms

Section 4(e) allows the Licensing Authority to be assigned "such other duties and functions as may be assigned to it by the Government." This open-ended provision potentially allows federal authorities to insert themselves into provincial decision-making without legislative oversight.

Section 6(2) creates ineligibility criteria that can be interpreted broadly by federal authorities to block provincial license applicants deemed undesirable by the federal government.

Section 15(1)(e) enables license revocation for contravention of "any provision of any other law in force in Pakistan," effectively giving federal authorities the power to invalidate provincial licenses through changes to federal regulations.

2.2 Strategic Minerals Designation

Section 2(1)(u) defines "strategic minerals" as "minerals notified as such by the Federal Government" without requiring provincial consultation or consent. This definition grants the federal government unilateral authority to designate any mineral as "strategic" and thereby subject it to enhanced federal oversight and control.

The bill fails to establish clear criteria for what constitutes a "strategic mineral," allowing politically motivated designations that serve federal rather than provincial interests.

2.3 Revenue and Fiscal Provisions

Section 16 mandates royalty payments "to the Government" without clearly specifying revenue sharing arrangements between federal and provincial authorities, potentially enabling federal capture of resource revenues.

The First Schedule establishes fixed royalty rates without provincial adjustment mechanisms, preventing the province from maximizing returns on its resources based on local conditions and needs.

2.4 Environmental Governance

Section 19(2)(b) requires obtaining "all necessary environmental approvals required under the environmental laws of Pakistan," effectively subordinating provincial environmental management to federal standards that may not reflect local conditions or priorities.

3. COMPARISON WITH 2017 ACT

The 2017 KP Minerals Act contained stronger protections for provincial sovereignty:

1. It established clear boundaries between federal and provincial jurisdiction
2. It guaranteed provincial representation on key decision-making bodies
3. It established a provincial mineral development fund with clear revenue allocation percentages
4. It allowed provincial authorities to set environmental standards appropriate to local conditions

The 2025 bill systematically weakens or eliminates these protections through centralizing provisions disguised as procedural improvements.

4. RECOMMENDATIONS

To align the bill with the 18th Amendment's intent and protect provincial sovereignty, we recommend:

1. Amend Section 2(1)(u) to require provincial consent for "strategic mineral" designations
2. Insert clear revenue sharing provisions that guarantee the province receives its constitutionally mandated share
3. Strengthen provincial representation on all oversight and regulatory bodies
4. Establish clear limits on federal intervention in licensing and operational decisions
5. Recognize provincial primacy in environmental management within provincial boundaries
6. Create independent dispute resolution mechanisms when federal-provincial conflicts arise

5. CONCLUSION

The KP Minerals Bill 2025, while ostensibly a provincial law, contains numerous provisions that effectively recentralize control over mineral resources and undermine provincial sovereignty as established in the 18th Amendment. Without substantial revisions, this bill represents a significant erosion of provincial rights and a return to centralized resource governance that the 18th Amendment was specifically designed to prevent.