Favouritism in ONGC ship charter process?

An MP has alleged that the public sector oil major has caused losses worth crores to the exchequer by not maintaining its offshore support vessels in order to charter them from certain companies

Favouritism in ONGC ship charter process?

An MP has alleged that the public sector oil major has caused losses worth crores to the exchequer by not maintaining its offshore support vessels in order to charter them from certain companies

EVEN as fuel subsidies continue to drain the state exchequer, the Oil and Natural Gas Corporation (ONGC), India's largest producer of crude oil, has been adding to the burden because of alleged mismanagement of its offshore operations.

An MP has accused it of deliberately not maintaining some of its own support vessels in order to charter them from certain companies.

The letters by Members of Parliament Tapan Sen (left inset) and Manohar Tirkey (right inset) have urged Petroleum Minister Murli Deora and Prime Minister Manmohan Singh to take note of and act on the irregularities in ONGC's offshore tenders

The ONGC plans to scrap 18 offshore support vessels (OSVs), which have been badly maintained directly or indirectly by the oil major.

Records indicate 30 other vessels are also in a bad state and nine of them have sunk along the Mumbai coast in the past few years.

The public sector unit (PSU) has spent Rs 1,120 crore for the charter and hiring of 11 OSVs since 2009, imposing an additional burden on the exchequer.

Member of Parliament Manohar Tirkey, has, in a letter to Murli Deora, Minister for Petroleum and Natural Gas (copy available with MiD DAY) pointed out that there are large-scale irregularities in the maintenance and chartering of these OSVs.
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"It appears that the ONGC's intention is to help certain companies get them the required ships, neglecting the huge loss of ONGC (sic)," Tirkey has said.

The oil major has a fleet of nearly 60 OSVs, out of which 30 are owned by it and 30 are on charter. Insiders told MiD DAY that less than 50 percent of the OSVs are functional, resulting in the management failing to achieve assigned oil production targets.

According to a senior ONGC officer, no action is taken against the companies responsible for grounding the ships. Even ONGC officers assigned the task of supervising the running and maintenance of the vessels have escaped being held accountable.
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Insiders said that there have also been irregularities in the process of ordering new ships to replace the grounded ones.

Security concerns

Another MP, Tapan Sen, has approached Prime Minister Manmohan Singh for intervening in contracts related to national importance and those concerning India's security and sovereignty.

Some of the companies shortlisted for orders by ONGC allegedly have links in Dubai and are owned by people evading arrests.

Sen has, in his letter, alleged that a Singapore-based company has been supplying rejected machines and ships for process platforms. The value of the contract has been put at $618 billion.

It has been alleged that some of the influential companies have also managed to change the technical bid evaluation criteria with the connivance of senior officials to suit their needs.

In another development, the ONGC tender of grid connectivity to offshore installations worth Rs 750 crore was awarded to a fraudulent company and an advance of Rs 240 crore was also made to the vendor.
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The contract was awarded despite forged documents having been submitted by the vendor.

The Other Side
When contacted, an ONGC spokesperson said that the oil major has 30 vessels owned by it which have been in operation since 1984. "With the economics involved in repairs, the management thought it prudent to phase out these vessels in stages, with a replacement plan in place. Therefore, as a first step, 15 vessels of the Sindhu series have been disposed off," he said.

Hiring fee

OSVs are hired by ONGC on a short-term and long-term basis through ICB tenders as per offshore requirements. The daily charter rates vary from approximately Rs 2.90 lakh ($6,450) to Rs 12.45 lakh ($27,685) depending on the type of vessel hired.

For the current fiscal $3.79 billion has been allocated for fuel subsidy, which is nearly 1.5 percent of the total expenditure. The allocation has seen a 15 per cent jump from the last fiscal.