State-run company incurred an avoidable expenditure of Rs. 146.71 crore

State-owned Oil and Natural Gas Corporation (ONGC) has been pulled up by the Comptroller and Auditor General (CAG) for hiring a drilling rig from Mukesh Ambani owned Reliance Industries Limited (RIL) without bidding leading to an avoidable expenditure of Rs. 146.71 crore.

In a report tabled in Parliament on Thursday, the CAG has said ONGC hired `Actinia’ rig from RIL for six months in 2009 for Rs. 146.71 crore pleading that the rig was urgently needed to drill three wells. However, the actual usage of the rig indicated that hiring was not necessary. Earlier also, CAG had in September 2012 criticised ONGC for hiring a deep sea drilling rig Dhirubhai Deepwater KG-1 (DDKG-1) in May 2009 without calling for competitive bids and on untenable grounds.

In its report tabled on Thursday, CAG said: "ONGC hired the rig from RIL for six months on assignment basis in deviation of standard tendering procedure citing requirement to drill at three locations. Actual deployment of the rig indicated that hiring of the rig was not necessary for drilling at any of the three identified locations. The entire expenditure of Rs. 146.71 crore on hiring of the rig from February 2009 to July 2009 was, thus, avoidable,’’ it stated. The rig had been hired by ONGC at a day rate or $190,000 to drill three wells.

However, CAG report said audit found that the rig was deployed at only one of the three locations that had been put as reason for urgently hiring the rig. The other two locations were drilled by two different rigs. Originally, RIL had hired rig Actinia from Transocean Offshore International Venture Ltd for 1,020 day period ending

July 1, 2009. It in November 2008 approached ONGC for sub-letting the rig for a period up to July 1, 2009. ONGC took up the offer reasoning that it needs to drill three wells. "Rig Actinia was hired without calling for competitive bids. Hiring of rig was not justified as the rig was not necessary for drilling any of the three identified locations,’’ the report said. Also, the rig remained idle from February 16, 2009 to February 22, 2009 for want of material supply. "During this period, standby day rate with crew was payable for the rig, which resulted in unfruitful expenditure of Rs. 4.64 crore,’’ the reported added.

Last year CAG stated that ONGC had in May 2009 hired DDKG-1 from RIL for four years ending July 2013 without calling for competitive bids at an operating day rate of $495,000 for first 180 days and at $510,000 from 181st day onwards. This rig was in fact hired by RIL from Deepwater Pacific-1 Inc in October 2007 for a period of five years beginning July 2009.

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