ONGC slammed for royalty issue

The Public Accounts Committee of Assam said ONGC did not pay royalty on a huge amount of crude oil

The Public Accounts Committee of Assam Legislative Assembly has slammed energy major ONGC for anomalies in royalty payment for four years from 2004-05 and asked the concerned department to recover the dues.

In its report submitted to the Assembly today, the Committee said "The ONGC Ltd do not pay royalty on a huge amount of crude oil showing it as unavoidable loss. There is no norm in defining the term 'unavoidable losses' for which government losses royalty."

"The Committee recommends that immediate steps should be taken for fixing the norms of unavoidable loss," the report said, asking the Mines and Minerals Department to pursue the matter "vigorously" to recover the outstanding amount and inform the Committee within three months.

The public-sector company had shown 99,028 MT crude oil as unavoidable loss from 2004-05 to 2008-09 and no royalty was paid for the said quantity, the Committee said in its observation on the report of the Comptroller and Auditor General of India for 2009-10 relating to Mines and Minerals Department of Government of Assam.

"...This resulted in suppression of production of 1.35 lakh MT and short payment of royalty of Rs 46.68 crore, including interest of Rs 9.54 crore to the state government," the report said.

Further, the Committee said there was a short payment on 27,681.60 MT of crude oil from FY'05 to FY'09 by ONGC.

"The Directorate of Geology and Mining Assam has claimed an amount of Rs 5.01 crore from ONGC Ltd for short payment of royalty on 27,681.60 MT of crude oil," it added.

The state government had also demanded Rs 33.80 crore as royalty on unavoidable losses shown by ONGC from April 1985 to March 2004, but the Union Ministry of Petroleum and Natural Gas did not accept it.

Further, the Assembly Committee recommended that "the department should pursue the matter with the ONGC for recovery of the penal interest of Rs 88.34 lakh".

The Committee recommended the state government to take up the matter on unavoidable loss again with the Centre and fix a norm on it as the state cannot do it.

Noting that the state government had earlier raised the issue with the Centre but without any success, the Committee said: "A joint Committee should be formed involving both state and Central governments to examine the matter and take decision in the interest of the state.