Examining CAG report on ONGC rig hiring from RIL: Government

The government is examining allegations made by India's official auditor of irregularities by state-run Oil and Natural Gas Corp (ONGC) in hiring a deep sea drilling rig from Reliance Industries (RIL) and will take necessary action in the matter, parliament was informed on Monday.

"The alleged irregularity in hiring of the rig DDKG-1 as observed by the Comptroller and Auditor General (CAG) is being examined by the government and based on the outcome of the examination, appropriate action will be taken in the matter," Petroleum Minister Dharmendra Pradhan told the Lok Sabha in a written reply.

"ONGC informed that rig DDKG-1 was hired on assignment basis as an outcome of shortage of rigs in the market for drilling ultra-deep water acreages, subsequent to approvals in the executive committee, executive purchase committee and ONGC Board," the minister said.

"ONGC has also stated that rig DDKG-1 was hired on assignment basis on such rates, terms and conditions that there is no loss to ONGC," he added.

Pradhan said ONGC was liable to pay penalty for the unfinished committed work programme and so hired DDKG-1 to complete the work.

CAG had in a September 2012 report said that ONGC had in July 2009 projected "a situation of emergency" to acquire an ultra-deep water rig by deviating from the standard tendering procedure of competitive bidding.

The auditor said that ONGC "deviated from the standard tendering procedure and hired a rig viz Dhirubhai Deepwater KG-1 (DDKG-1) from RIL without calling for competitive bids for a period of four years on untenable grounds".

ONGC had in May 2009 hired DDKG-1 from RIL for four years ending July 2013 at an operating day rate of $495,000 for the first 180 days and at $510,000 from 181st day onwards.