Official auditor CAG today rapped the government for 16-year delay in giving the Ratna and R-Series oil and gas fields, saying over Rs 26,000 crore of hydrocarbons production was deferred besides Rs 1,086 crore damage to un-used facilities in the Arabian sea.
The medium-sized Ratna and R-Series (R&RS) fields off the Mumbai coast have been languishing since 1993 when the PV Narasimha Rao-led Congress government decided to invite bids.
The fields were awarded to a consortium led by Essar Oil in 1996. The Cabinet Committee on Economic Affairs (CCEA) in 1999 approved finalising and concluding PSC within six months after negotiations are held by Negotiating Team of Secretaries (NTS) but the same has not been signed till date over what royalty and cess is to be charged from Essar Oil and partners.
"NTS kept setting targets for completion of negotiations and signing of Production Sharing Contract (PSC)... However, NTS did not adhere to its own targets for completion of the negotiations. NTS held 20 meetings between November 1999 and June 2013", CAG said in an audit report tabled in Parliament today.
The official auditor said considering four years and eight months as the time that would have been taken to start production, R&RS fields should have been up by October 2005.
Based on the development plan submitted by the winning consortium, "domestic production of 56 million barrels of crude oil (valuing Rs 25,650 crore) and 920 million standard cubic meter of natural gas (valuing Rs 550 crore) had been deferred during October 2005 to March 2015," it said.
Government's take of Rs 1,050 crore as royalty and cess on crude oil and Rs 55 crore as royalty on natural gas for the period also remained deferred and unrealised, CAG said.
It said state-owned Oil and Natural Gas Corp (ONGC) had created facilities in Ratna R-12 field, which is part of R&RS, at a cost of Rs 472.55 crore. These facilities were used by the company for production since 1983 before production was stopped in September 1994 after the field was up on auction.
"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 1085.70 crore", CAG said.
It said the CCEA had on March 9, 1999 approved freezing of the rates of levy of royalty and cess prevailing at the time of the bidding (Rs 900 per tonne as cess and Rs 528 per tonne as royalty).
NTS in April 2005 wanted payment of statutory levies at current rates rather than those prevailing in 1995. Essar Oil and partners did not agree. Attorney General concurred that PSC can be signed with old royalty rates.
A note was sent to CCEA in January 2008 and resubmitted in June 2008 but Cabinet Secretariat returned seeking certain modifications/corrections on some deficiencies.
Another note was sent to CCEA on July 9, 2008 but the matter was re-examined by Oil Ministry and "it was decided that
NTS should consider the matter once again with a view to analysing in detail the various alternatives available along with their financial implications. Thereafter, no final decision was taken," it said.
