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Centre Studying CAG Report on ONGC Rig Hiring from Reliance

Published: 17th March 2015 06:00 AM  |   Last Updated: 17th March 2015 03:49 AM   |  A+A-

NEW DELHI:  The Ministry of Oil, Petroleum & Natural Gas is examining alleged irregularities in state-run Oil and Natural Gas Corporation (ONGC) hiring a deepsea drilling rig from Reliance Industries Ltd (RIL).

“The alleged irregularity in hiring of the rig DDKG-1 as observed by  the Comptroller and Auditor General (CAG) is being examined by the government and based on the outcome of the examination, appropriate action will be taken in the matter,” Dharmendra Pradhan, Oil Minister, said in the Lok Sabha in a written reply on Monday.

Pradhan.jpgIn September 2012, the CAG said ONGC deviated from the standard tendering procedure hiring a rig - Dhirubhai Deepwater KG-1 (DDKG-1) - from Reliance Industries Limited without calling for competitive bids for a period of four years on untenable grounds.

The rig was hired to complete minimum work programme of drilling exploratory wells. ONGC drilled seven ultra-deep wells using DDKG-1 rig till December 2010.

Of these, three were appraisal wells, drilled to confirm previous finds.

ONGC paid an operating day rate of $495,000 for first 180 days and at $510,000 from 181st day onwards. The effective day rate worked out to $563,488.

“ONGC informed that rig DDKG-1 was hired on assignment basis as an outcome of shortage of rigs in the market for drilling ultra-deep water acreages, subsequent to approvals in Executive Committee, Executive Purchase Committee and ONGC Board,” he said.

CAG, however, did not accept the reply.

“Considering the rig moratorium granted by the government and availability of an alternate rig by December 2010, the situation did not warrant acquiring of the rig on emergency basis by deviating from the standard bidding procedure,” it noted.

In July 2009 ONGC projected a situation of emergency to acquire an ultra-deep water rig by deviating from the standard tendering procedure of competitive bidding.

The  said Oil and Natural Gas Corporation was liable to pay penalty as cost of unfinished committed work programme and so hired DDKG-1 to complete that.


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