Delay in awarding oil and gas fields has cost government Rs26,200 cr

Another report says financial burden on railways has risen from Rs.10,659 cr to Rs.19,936 cr due to project delays


The enrolment of children in schools providing mid-day meals was showing a consistent decline, according to a CAG report. The number of children enrolled in schools covered by the scheme has come down to 138.7 million from 146.9 million in 2009-10. Photo: Mint
The enrolment of children in schools providing mid-day meals was showing a consistent decline, according to a CAG report. The number of children enrolled in schools covered by the scheme has come down to 138.7 million from 146.9 million in 2009-10. Photo: Mint

New Delhi: The Comptroller and Auditor General (CAG) of India in a report on Friday estimated that the delay in awarding the Ratna and R-Series oil and gas fields off Mumbai’s coast had led to the loss of production of 56 million barrels of crude oil and 920 million metric standard cubic metres of natural gas between October 2005 and March 2015.

Taking the Reserve Bank of India’s reference rate of the dollar for each month, this comes to around Rs.26,200 crore. A further Rs.1,086 crore was lost due to damage to equipment in the fields that were productive at one time, operated by state-owned Oil and Natural Gas Corp. Ltd (ONGC).

India imports 80% of its oil requirements.

The fields were languishing since 1993, when the government decided to invite bids. CAG said the government decided to invite the private sector but did not realize that it would take so long to start production.

The fields were awarded to a consortium led by Essar Oil in 1996. ONGC was a partner in the consortium with a 40% share.

The cabinet committee on economic affairs (CCEA), in 1999, approved finalizing and conclusion of a production-sharing contract within six months, but the contract has not been signed till date over differences regarding the quantum of royalty and cess to be paid by Essar Oil and its partners.

The government auditor said the Ratna and R-Series fields should have been operational by October 2005. The government’s share of Rs.1,050 crore as royalty and cess on crude oil and Rs.55 crore as royalty on natural gas for the period remained deferred and unrealized.

ONGC had created facilities in Ratna R-12 field, which is part of the Ratna and R-Series fields, at a cost of Rs.472.55 crore. These facilities were used by the company since 1983, until production was stopped in September 1994 after the field was up on auction. CAG estimated the current cost of the equipment at around Rs.1,086 crore.

“ONGC’s own inspections reported the facts of serious deterioration in the condition of the facilities and ‘plundering and looting’ of platform utilities and equipment. The estimated repair cost for the existing facilities would be Rs.1,085.70 crore,” CAG said.

Mid-day meal scheme

In an another report, the auditor said there is an institutionalized exaggeration of figures about children benefiting from the mid-day meal scheme and irregularities such as inflated costs and fudging of data prevail.

The enrolment of children in schools providing mid-day meals was showing a consistent decline, indicating that more and more children were seeking better education and not just food.

In its report, CAG said that from 146.9 million in 2009-10, the number of children enrolled in schools covered by the scheme had come down to 138.7 million.

In contrast, the enrolment of children in private schools witnessed a jump from 40.2 million to 55.3 million in the same period.

“Clear trends were noticed, which demonstrated that the meal served its purpose only when the expectation of the parents, with respect to good education for their wards, was fulfilled,” CAG said in its report.

The auditor’s observation assumes significance as the midday meal scheme was launched two decades ago with an aim to increase enrolment and retention of children in schools.

Railways

In a report on railways, CAG said that due to delay in completion of projects, the financial burden on the ministry had gone up from Rs.10,659 crore to Rs.19,936 crore.

The report, which was prepared by examining records from 2011-14, revealed that while the ministry considered only 362 projects as ongoing till March 2014, they actually numbered 442. These included 75 projects which were ongoing for more than 15 years and three projects which were 30 years old.

Focusing on the projects in the North-East where costs escalated by 265%, the auditor revealed that out of the 11 delayed projects, costs for seven had increased from Rs.7,651 crore to Rs.20,313.75 crore.

The auditor pointed out that 82 projects shown as completed by the railways were actually incomplete. They required at least Rs.10,832 crore more for completion.

In the case of dedicated freight corridor projects, CAG observed that the ministry took eight years to draw up and approve the concession agreement and six years to finalize the detailed project cost. This was despite the ministry having all available data. As a result, its share of the cost went up from Rs.9,393 crore to Rs.27,153 crore.

Besides, the auditor observed several deficiencies in the working of the railways. These included not following the electronic tendering process despite instructions issued by the Railway Board in 2003; calling and awarding of tenders without availability of funds; and premature termination of contracts due to improper contract management.

In total, CAG presented 11 reports on Friday in Parliament.