CAG pulls up ONGC for losses in oilrig purchases

New Delhi, May 17 (IANS) India’s state-run Oil and Natural Gas Corporation (ONGC) incurred losses to the tune of billions of rupees in the purchase and utilisation of oilrigs for offshore drilling, the Comptroller and Auditor General (CAG) of India has said in its annual report.

The energy major failed to save a sum of Rs.4.36 billion because it preferred to hire rigs instead of purchasing them, the CAG’s performance audit of ONGC for 2005-06 pointed out.

Support TwoCircles

The company would have saved that amount if it had made an outright purchase of these rigs instead of hiring them.

Even while hiring the rigs, the corporation could have avoided an additional expenditure of Rs.3.57 billion if it had accepted the offers of certain bidders on nomination basis. Later the same rigs were hired at higher rates causing this avoidable expenditure.

The CAG also noted that the firm was liable to pay damages of Rs.887.4 million to the Director General of Hydrocarbons when the minimum work programme registered shortfalls or delays between 2002-03 to 2005-06.

In turn, the corporation had to seek extension for completing work in respect of five blocks under New Exploration Licensing Policy (NELP) I-III.

The company was also losing at least one rig a year due to the idling of rigs caused by delays in material and logistic support and unplanned repairs. The total avoidable expenditure between 2002-03 and 2005-06, due to this, was worked out to Rs.1.51 billion.

This did not deter the ONGC management from deploying costlier jack up rigs for 79 weeks for work over jobs during the said period even though it was instructed to go for modular rigs to cut costs. Ignoring the instructions cost the exchequer Rs.1.09 billion, says the CAG.

But the most starling revelation in the report is that ONGC went ahead with drilling of 183 oil wells as part of four major exploratory and production projects without obtaining mandatory environmental clearance from the environment and forests ministry between 2002-03 and 2005-06.

This naturally resulted later in abandoning the wells. The total monetary loss on this account has not been mentioned in the report.

The CAG also observed that the corporation spent an amount of Rs.770.5 million on upgradation and dry dock of a rig during March-November 2003, which became unfruitful due to improper planning as the benefits of upgradation and dry dock could not be availed by ONGC.

Indo-Asian News Service