Additional funds for ADP 2025-26: Sindh cabinet approves framework for receiving gas royalty in kind

KARACHI: The Sindh cabinet on Tuesday approved a new framework to receive the province’s constitutionally mandated 12.5 percent natural gas royalty in kind and also allowed additional funds for various projects under Annual Development Plan (ADP) 2025-26.

Sindh Chief Minister Syed Murad Ali Shah presided over the cabineet meeting of the provincial cabinet and approved a wide-ranging package of financial, infrastructure, energy, health, security and education initiatives, including Rs8.825 billion in additional funds for water and drainage schemes across the province and Rs11.198 billion worth of major infrastructure projects for Karachi.

The meeting, held at CM House, was attended by provincial ministers, advisors, special assistants, the chief secretary and other senior officers.

Under the recommendations of the Cabinet Committee on Finance, presented by Minister for Local Government Syed Nasir Shah, the cabinet approved Rs8.824 billion in additional funds for 16 ADP schemes in the water supply and drainage sector for the financial year 2025–26. Of this amount, Rs6.206 billion will be re-appropriated from the ADP block allocation, while Rs2.618 billion will come from another development allocation.

The chief minister directed the relevant administrative departments to ensure that all payments are made within the current financial year after completion of the required codal formalities.

In another major decision, the cabinet approved 11 non-ADP infrastructure schemes under the Karachi Mega Project, to be financed through the `allocation for New Development Initiatives’ of the ADP 2025 - 26. These projects carry a cumulative estimated cost of Rs 11.198 billion.

The schemes include improvement and rehabilitation of important roads and transport corridors in Karachi, such as Haji Ibrahim Essa Road, Haji Camp Road, Korangi Link Road, Clifton roads connecting Marine Drive, Mehran and Pajero roads in Scheme-33, Korangi Creek Airbase Road, the extension of Jinnah Avenue in Gulzar-e-Hijri, and the Baldia Stadium Road project linking Shahrah-e-Orangi to Hub River Road.

The cabinet also approved the construction of two major bridges at Power House Chowrangi in North Karachi and 4-K Chowrangi in Surjani Town to improve traffic flow and urban connectivity. To kick-start these schemes, the cabinet sanctioned Rs560 million - around five per cent of the total estimated cost - from the ADP during the current financial year.

Separately, the cabinet approved a non-ADP scheme titled “Rehabilitation and Uplifting of Dargah Qalandar Lal Shahbaz, Lal Bagh and Civic Centre, Sehwan” for Rs485 million. The project aimed at improving facilities and infrastructure around the shrine of Hazrat Lal Shahbaz Qalandar and adjacent public spaces. An initial allocation of Rs24.25 million, equivalent to five per cent of the project cost, has been sanctioned for the current financial year.

The cabinet also approved the introduction of a new framework to receive the province’s constitutionally mandated 12.5 per cent natural gas royalty in kind, instead of entirely in cash, on a field-to-field basis.

The proposal, aligned with Article 161(1)(a) of the Constitution, the Petroleum Act, 1949, and applicable Petroleum Exploration and Production Policies and Rules, envisages a hybrid model under which selected gas fields will shift to an in-kind royalty system while the existing cash mechanism continues for remaining fields.

The CM said that his government expects the arrangement to enhance revenue generation, improve energy security, support local industry and enable monetisation of royalty gas at market-linked prices. Estimates presented to the cabinet suggest that the new mechanism could generate an additional annual financial benefit of over Rs26 billion for Sindh through improved value realisation of its gas resources.

CM Murad Ali Shah reiterated the provincial government’s commitment to improving urban infrastructure, enhancing public services and ensuring transparent utilisation of public funds.

The chief minister approved the formation of an inter-departmental committee headed by the Secretary Energy to prepare a comprehensive policy framework for aggregation, allocation, commercialisation, disposal and monetisation of royalty gas. The committee has been tasked with finalising its recommendations within 30 days for submission to the cabinet.

Settlement of IHS Health Liabilities

The Sindh Cabinet also approved the release of Rs395.019 million to Integrated Health Services (IHS) to settle outstanding liabilities arising from the management of 111 outsourced healthcare facilities - including 105 Rural Health Centres (RHCs) and six Taluka Headquarters (THQ) hospitals - under a Public–Private Partnership arrangement from March 2016 to October 2021.

The decision follows recommendations of a committee formed to scrutinise the remaining liability claim. After a detailed review, the committee assessed the admissible liability at Rs395.019 million, deducting Rs3.264 million related to 11 unverified employees.

The cabinet was informed that Rs 425.713 million had already been released following cabinet approval in November 2024. With the latest approval, the remaining verified liability claim of IHS will be settled.

The CM directed IHS to submit complete records of released and current liabilities to the Director General Audit for verification and record purposes.

Copyright Business Recorder, 2026