The Comptroller and Auditor-General (CAG) has pulled up Oil and Natural Gas Corporation Limited (ONGC) for hiring a rig from Reliance Industries Limited (RIL) without bids, incurring an avoidable expenditure of Rs. 146.71 crore.
In a report tabled in Parliament on Thursday, the CAG said ONGC hired ‘Actinia’ from the Mukesh Ambani-owned company for six months in 2009, pleading that it was urgently needed to drill three wells.
However, the actual use of the rig indicated that its hiring was not necessary. “ONGC hired the rig from RIL for six months, on an assignment basis, in deviation of the standard tendering procedure, citing a requirement to drill at three locations. Actual deployment of the rig indicated that [the] hiring… was not necessary for drilling at any of the three identified locations. The entire expenditure of Rs. 146.71 crore on hiring the rig from February to July 2009 was, thus, avoidable.”
An audit found that the rig was deployed at only one of the three locations. The other two were drilled by two other rigs.
RIL had hired Actinia from Transocean Offshore International Venture Ltd. for 1,020 days, ending July 1, 2009. In November 2008, it approached ONGC for sub-letting the rig until July 1, 2009. ONGC accepted the offer.
“Actinia was hired without competitive bids… The hiring of the rig was not justified as it was not necessary for drilling any of the three identified locations,” the report said.
Furthermore, the rig remained idle from February 16 to 22, 2009, for want of material supply. “During this period, the standby day rate with crew was payable…, which resulted in an unfruitful expenditure of Rs. 4.64 crore.”
Last year, the CAG disclosed that ONGC had hired the deep sea drilling rig, Dhirubhai Deepwater KG-1, from RIL in May 2009 for four years, ending July 2013, without calling for bids, at an operating day rate of $495,000 for the first 180 days and $510,000 from the 181st day. In fact, this rig was hired by RIL from Deepwater Pacific-1 Inc in October 2007 for five years, beginning July 2009.
