Regulation of Mines and Oil Fields and Mineral Development (Federal Control) Act, 1948

This 1948 Act gives government -- federal or provincial depending on the resource -- broad power to make rules regulating mining and oil-field activity across Pakistan. Section 2 authorises the "appropriate Government" to make rules covering how licences, leases, and mining concessions are granted or renewed, the fees charged, the conditions attached, when a licence can be refused or revoked, the royalties and rents payable, and even the control of production, storage, distribution, and pricing of minerals and mineral oils. Section 6 defines "appropriate Government" as the Federal Government for nuclear substances, oil fields, and gas fields, and the Provincial Government for other mines and minerals.

Section 3 makes clear that breaching any rule made under this Act can be punished with imprisonment for up to three years, or a fine, or both. Section 3A, added later, lets the President enter into Production Sharing Agreements with companies (Pakistani or foreign) to explore, prospect, and mine petroleum on negotiated terms. Section 3B and the Schedule set out specific concessions available to petroleum exploration companies that are not covered by a Production Sharing Agreement -- these include a royalty fixed at 12.5% of well-head value and income tax on petroleum profits fixed at 40% for onshore Pakistan (Schedule item 2), tax exemptions for expatriate staff's personal effects and a defined annual allowance for duty-free commissary goods, and a three-year income-tax exemption for foreign nationals employed by a licensee (Schedule item 13).

Section 4 gives rules made under this Act overriding effect over any inconsistent provision in other laws. Section 5 lets the appropriate Government exempt any mineral or mineral oil from all or some of these rules.

This Act is very old and has been amended extensively -- the Schedule concessions alone have been substituted and added to multiple times through S.R.O. notifications from the 1990s and 2000s, and one offshore-Pakistan concession (Schedule item 17) was stated to be valid only for five years from 1 January 1998, meaning it has since expired. Given the extent and age of these amendments, and that petroleum policy in Pakistan has evolved considerably since, anyone relying on the specific royalty rates, tax rates, or concession terms described here should verify them against the current Petroleum Policy and tax law rather than assume the figures in this text still apply.