CAG criticises ONGC for a loss of Rs 8k cr

CAG criticises ONGC for a loss of Rs 8k cr

CAG criticises ONGC for a loss of Rs 8k cr

The Comptroller and Auditor General of India (CAG) on Wednesday flayed public sector Oil and Natural Gas Corporation (ONGC) for poor planning in hiring, and use of drilling rigs leading to loss of Rs 7,995 crore.

“There have been persistent delays (up to 508 days) in the tendering process for hiring rigs. The availability of rigs for drilling in ONGC was lower than intended on account of delays and deficiencies in the hiring process and the rigs remained out of cycle,” the CAG report tabled in Parliament on Wednesday, said.

The report said that the efficiency of rig operation was also poor. “The rigs that were deployed for drilling idled for considerable periods; bulk of the idling period was possible to be controlled by the company. The inefficiency led to a lower cycle speed and commercial speed of rigs, besides the company incurring significant idling cost (Rs 6,418 crore),” it said.

The report further said that the rigs that ONGC owned performed poorly compared with the hired rigs. “The commercial speed of owned rigs were low, while the cost of their operation was high. Even though repair was carried out for owned offshore rigs, the financial viability of such repair remained doubtful. The post-repair performance of owned offshore rigs also did not match up to assumption made,” the report said.

According to the report, the measurement of efficiency of rigs was also “flawed”. “Inefficiencies were built in the plans leading to a lower target of efficiency parameters (cycle speed). Even the lower targets were not achieved in actual operation. The performance of the drilling service group, responsible for operation of the rigs) was not measured against targets. In fact, the drilling service group met and exceeded their target even as the company failed to match up to its planned efficiency targets,” it said.

The company also did not adhere to safety procedures and continued to do drilling and testing operations even after one anchor of its rig Sagar Vijay had snapped.As a result, another anchor of the rig snapped which caused drifting of the rig from its location.

Consequently, the well had to be closed and abandoned. As a result, expenditure of Rs 1,577.27 crore incurred by ONGC on drilling of the original location, and drilling of a relief well by using another rig, proved avoidable, the CAG report said.

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