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CAG warns govt on private oil deals

The Comptroller and Auditor General (CAG) has asked the petroleum ministry to be extra vigilant and maintain strict "compliance and control" while signing contracts with private companies for exploration and production of oil and gasfields in the country. Anupama Airy writes. Under the scanner

business Updated: Oct 14, 2011 02:41 IST
Anupama Airy

The Comptroller and Auditor General (CAG) has asked the petroleum ministry to be extra vigilant and maintain strict "compliance and control" while signing contracts with private companies for exploration and production of oil and gasfields in the country. http://www.hindustantimes.com/Images/HTEditImages/Images/14-10-11-buss21b.jpg

In a recent letter to the petroleum ministry dated October 3, the CAG has re-emphasised the need to protect government's financial interests. It has also pointed out "numerous deficiencies in compliance and control issues vis-à-vis the provisions of the contracts" by the petroleum ministry and the Directorate General of Hydrocarbons with private developers of oil and gas fields in India.

"Our (CAG's) audit indicated that there is considerable scope for improvement in the management of hydrocarbon exploration and production with private sector participation..," deputy CAG Rekha Gupta said in a letter to petroleum secretary GC Chaturvedi. "Government representatives should protect Government of India's financial interests at the time of review and approval of development plans in the Management Committee."

The letter has also asked the petroleum ministry to investigate eight contracts awarded on a single-bid basis by Mukesh Ambani-led Reliance Industries Ltd (RIL) in its KG-D6 gas field to Aker Group.

"The expertise, ownership pattern and experience of the Aker group needs to be ascertained," Gupta's letter said.

The letter follows the government auditor's recent findings criticising the working of some of India's private oil and gas companies. The report was tabled in Parliament on September 8.

It is being currently examined by the Parliament's Public Accounts Committed under the chairmanship of Murli Manohar Joshi.

An RIL spokesperson did not offer any comments.

The company, however, in a recent letter to the government had justified its position over the awards made by it on single-tender basis. The "three tender processes held up by CAG as the hallmark of good competition is un-achievable," RIL said in a September 26 letter.

Moreover, the procurement procedures in the contracts are designed differently from normal government contracting procedures, the letter said.