CAG raps ONGC for tardy pace of discovery

‘ONGC monetised only 73 out of 158 discoveries’

Written by ENS Economic Bureau | New Delhi | Published: August 29, 2012 12:47:41 am

India needed more coal and so,competitive bidding had to wait,says the government,rejecting the CAG report on captive coal block allocation. But this alacrity to increase output was not seen when it came to the oil and gas sector.

In a report tabled in Parliament on Tuesday,the Comptroller and Auditor General (CAG) indicted the country’s flagship oil explorer,the public sector ONGC for various lapses,including inadequate emphasis on its core activity of exploration in the performance MoU signed with the government,tardy pace in monetising discoveries and resultant decline in production,inefficiency in exploration efforts and inflated reporting of reserve accretion.

Puncturing the ONGC’s claim of a healthy and rising ratio of reserve accretion (RRR),the CAG indicated that this was mainly on account of wrong reporting of reserve accretion (“due to re-interpretation”) and a decline in production attributable to aging fields and delay in monetisation.

“Consequently,ONGC’s healthy RRR of greater than 1 is,in fact,due to a static/declining trend of production and reserves being accreted mainly through re-interpretation,” the auditor said.

ONGC had monetised only 73 out of its 158 discoveries made during 2002 to 2011,the CAG said,adding,though the firm operates in a field of cutting edge technology,it did not have a system of independent assessment of its technical capacity. The auditor’s review was for the period 2007-08 to 2010-11.

ONGC CMD Sudhir Vasudeva said,“I have not studied the report. We will examine CAG’s observations. I don’t want to jump the gun.”

Strongly recommending higher weightage to exploration efforts in annual MoUs,the CAG said the ONGC board must ensure that the criteria used for reporting on reserve accretion matches the targets set in MoUs.

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