Mines Act 1923

[ACT NO. IV OF 1923]

(23rd February 1923)

An Act to amend and consolidate the law relating to the regulation

and inspection of mines, whereas it is expedient to amend and consolidate the law relating to the
regulation and inspection of mines; It is hereby enacted as follows.

PRELIMINARY

1- Short title, extent and commencement.

(1) This Act may be called the Mines Act. 1923.

(2) It extends to the whole of Pakistan

(3) It shall come into force on the first day of July, 1924.

2. Omitted.

3. Definitions. In this Act, unless there is anything repugnant in the subject or context.

(a) “agent” when used in relation to a mine, means any person appointed or acting as

the representative of the owner in respect of the management of the mine or of any

part thereof, and as such superior to a manager under this Act.

(aa) “appropriate Government” means, in relation to mines of nuclear substances,

mineral oil natural gas and liquids and substances declared by Federal Law to be

dangerously inflammable, oilfields and gas fields), the Federal Government and, in

relation to other mines the Provincial Government

(b) “Chief Inspector” means the Chief Inspector of Mines appointed under this Act.

(c) “child” means a person who has not completed his fifteenth year.
(cc) “day” means a period of twenty-four hours beginning at midnight;

(d) a person is said to be “employed” in a mine who works under appointment by or

with the knowledge of the manger, whether for wages or not, in any mining

operation, or in cleaning or oiling any part of any machinery used in or about the

mine, or in any other kind of work whatsoever incidental to, or connected with,

mining operations;

(e) “Inspector” means an Inspector of Mines appointed under this Act, and includes a

District Magistrate when exercising any power or performing any duty of an

Inspector which he is empowered by this Act to exercise or perform;

(f) “mine” means any excavation where any operation for the purpose of searching for

or obtaining minerals has been or is being carried on, and includes all works,

machinery, tramways and sidings, whether above or below ground, in or adjacent

to or belonging to a mine;

Provided that it shall not include any part of such premises on which a

manufacturing process is being carried on unless such process is a process for

coke making or the dressing of minerals;

(g) “owner”, when used in relation to a mine, means any person who is the immediate

proprietor or lessee or occupier of the mine or of any part thereof, but does not

include a person who merely receives a royalty, rent or fine from the mine, or is

merely the proprietor of the mine subject to any lease, grant or license for the

working thereof, or is merely the owner of the soil and not interested in the minerals

of the mine; but any contractor for the working of a mine or any part thereof shall
be subject to this Act in like manner as if he were an owner, but not so as to exempt the owner
from any liability;

(h) “prescribed” means prescribed by regulations, rules or bye-laws;

(i) “qualified medical practitioner” means any person registered under any Act of the

Central Legislature or any Provincial Legislature providing for the maintenance of a

register of medical practitioners, and includes, in any area where no such last

mentioned Act is in force, any person declared by the appropriate Government by

notification in the official Gazette, to be a qualified medical practitioner for the

purposes of this Act;

(j) “regulations”, “rules” and “bye-laws” means respectively regulations, rules and byelaws made
under this Act;

(jj) where work of the same kind is carried out by two or more sets of workers working

during different periods of the day, each of such sets is called a ‘relay’ and the

period for which it works is called a ‘shift’.

(k) “serious bodily injury” means any injury which involves, or in all probability will

involve, the permanent loss of the use of, or permanent injury to, any part of the

body or the permanent loss of or injury to the sight or heating, or the fracture of any

part of the body or the enforced absence of the injured person from work for a

period exceeding twenty days and

(l) “week” means the period between midnight on Saturday night and midnight on the

succeeding Saturday night.

 Regulation of mines and oil fields and mineral development
(Government control) (amendment)Act, 1976

[ACT No. LXXXIII of 1976]

An Act further to amend the Regulation of Mines and Oil-fields and Mineral Development
(Government Control) Act, 1948.

whereas it is expedient further to amend the Regulation of Mines and Oil-fields and Mineral
Development (Government Control) Act, 1948 (XXIV 1948), for the purposes hereinafter
appearing.

It is hereby enacted as follows: -

l. Short title and commencement

(l)- This Act may be called the Regulation of Mines and Oil-fields and Mineral Development
(Government Control)(Amendment) Act, 1976.

(2)- It shall come into force at once.

2. insertion to new sections 3A and 3B, Act XXIV of 1948

In the Regulation of Mines and Oil-fields and Mineral Development (Government Control) Act,
1948 (XXIV of 1948), hereinafter referred ro as rhe said Act after section 3, the following new
sections shall be inserted, namely.

3A. Production sharing agreement

(1) Notwithstanding anything contained in any other law or rules for the time being in force, the
President may enter into an agreement with any company, whether incorporated in Pakistan or
outside Pakistan, for the grant of a license or lease to explore, prospect and mine petroleum on the
basis of a Production Sharing Agreement and on such Terms and conditions as may be agreed
upon between the Federal Government and the company.
(2) Notwithstanding anything contained in the Income-tax Act, 1922 (Xl of 1922), a company with
which an agreement such as is referred to in sub-section (1) is for the time being in force shall not
be liable to pay tax on its income, profits or gains.

3B Concessions to petroleum exploration companies

{l) Notwithstanding anything contained in any other law for the time being in force, every
company, whether incorporated in Pakistan or outside Pakistan, to whom a license or a lease to
explore, prospect and mine petroleum is granted under this Act, not being a company such as is
referred to in subsection (1) of section 3A, shall be entitled to the concessions specified in the
Schedule in addition to any concessions for the time being admissible to it under any other law or
the rules made under this Act.

(2) The Federal Government may, by notification in the official Gazette, amend the Schedule so
as to add any concessions thereto or to improve any concessions therein. ".

3. Addition of Schedule, Act XXIV of 1948.

-In the said Act, after section 6, the following Schedule shall be added, namely: -

SCHEDULE (See Section 38)

1- Any provisions of the rules made under section 2, or of any amendment in the Income tax
Act, 1922 (XI of 1922), hereinafter referred to as the Act, made after the effective date of
an agreement for the grant of a license or lease to explore, prospect or mine petroleum,
which are inconsistent with the terms of the agreement, shall not apply to the extent of such
inconsistency to a company which is a party to the agreement.

2- Royalty shall be charged at a fixed rate of l2 percent of the well-head value and shall form
part of the sum of payments to the Federal Government and taxes on income which shall
neither be more than 55 percent nor less than 50 percent of the profits or gains before
deduction of " payments to the Government " referred to in sub-rule (2) of rule 4 of the
Second Schedule to the Act, hereinafter referred to as the said Schedule.
3- Before commencement of commercial production of petroleum, any expenditure on
searching for, or on discovering and testing, a petroleum deposit, or on winning access
thereto, allocable to a surrendered area and to the drilling of a dry hole, shall be deemed to
be lost at the time of the surrender of the area or the completion of the dry hole, as the case
may be, for the purpose of the Second Schedule to the Act. Such lost expenditure shall be
allowed in one of the two ways mentioned in sub-rule (1) of rule 2 of the said Schedule.

4- In addition to the net profits, the amount charged in annual financial accounts on account
of additional allowance admissible under rule 3 of the Second Schedule to the Act, and
depreciation at such rate as may be agreed upon between the president and a licensee or
lessee, which is a company incorporated outside Pakistan, .including its assignee, shall be
allowed to be remitted and retained abroad, provided that the aggregate amount of such
additional allowance and depreciation does not exceed an agreed percentage of the
investment in assets on which depreciation ls charged.

5- The value of crude oil for purposes of royalty and income-tax shall be calculated on the
basis of the price realized in transactions with purchasers other than the subsidiaries or
affiliates of the licensee or lessee, including its assignee, and in case of transactions with a
subsidiary or affiliate, the value shall be calculated on such basis as may be agreed upon
between the Federal Government and the licensee or lessee.

6- The income derived by the licensee or lessee from the use of any surplus capacity of its
pipeline by any other licensee or lessee shall be assessed on the same basis as its income
from petroleum produced by it from its concession area.

7- A licensee or lessee which is a company incorporated outside Pakistan, including its

assignee, shall be allowed to export its share of petroleum after meeting such portion of the
internal requirement of Pakistan as may be agreed upon.
8- Sale proceeds of the share of petroleum exported by a licensee or lessee which is a company
incorporated outside Pakistan, including its assignee, shall be allowed to be retained abroad
and to be used freely by it, subject to the condition that it shall bring back such portion of
these proceeds as is required to meet its obligations under the lease.

9- No customs-duty or sales tax shall be levied on the import of machinery and equipment
specified in the agreement for the purposes of exploration and drilling prior to commercial
discovery.

10- A concessionary consolidated rate of 5 ¼ percent customs-duty advalorem, including sales

tax and any surcharge related thereto, shall be charged on import of machinery and
equipment required for development of each commercial discovery until twenty-four
months from the effective date of the mining lease granted with respect to each such
discovery, and thereafter the normal ratio of customs-duty, sales tax and any other duty
shall be applicable.

11- Foreign nationals employed by a licensee or lessee or its contractor shall be allowed to
import commissary goods free of customs-duty and sales tax to the extent of $ 550 per
annum, subject to the condition that the same shall not be sold or otherwise disposed of in
Pakistan.

12- Foreign nationals employed by a licensee or lessee or its contractor shall be allowed to
import used and bona fide personal and house-hold effects. excluding motor vehicles, free
of customs-duty and sales tax subject to the condition that the same shall not be sold or
otherwise disposed of in Pakistan.
 13- Foreign nationals employed by a licensee or lessee or its contractor shall not be charged
income-tax for a period of three years from the date of their arrival in Pakistan in
accordance with, and subject to the provisions of, clauses (xii ) and (xiiia) of sub-section
(3) of section 4 of the Act as in force on the effective date of the agreement with the licensee
or lessee.

14- The data in respect of areas surrendered by a previous licensee or lessee shall be made
available for inspection to a prospective licensee free of charge.

15- Initial participation by the Federal Government in exploration shall be to such extent as
may be agreed upon between the Federal Government and the licensee.

4. Repeal.

The Regulation of Mines and Oil-fields and Mineral Development (Government Control
(Amendment) Ordinance, 1976 (XLIV of 1976), is hereby repealed.