CAG finds fault with ONGC’s hiring of rig

A report by the Comptroller and Auditor General of India (CAG) found fault with ONGC for hiring a rig from Reliance Industries (RIL) in 2009 for six months at a cost of Rs 146.7 crore without bidding.

While ONGC hired it in 2009 on grounds that it needed the equipment to drill three wells urgently, the CAG report suggests the rig was not necessary going by the records of the rig’s utilization.

The report shows that ONGC need not have hired the rig for drilling at any of the three identified locations. The entire expenditure of Rs 146.71 crore on hiring of the rig from February 2009 to July 2009 was, thus, avoidable, the report said.

ONGC hired the rig on assignment basis in deviation of standard tendering procedure citing requirement to drill at three locations.

The rig idled from February 16, 2009 to February 22, 2009 for want of material supply. During this period, standby day rate with crew was payable for the rig, which resulted in unfruitful expenditure of Rs 4.64 crore, the report said.

The audit found that the rig was deployed at only one of the three locations that had been put as reason for hiring of the rig. The other two locations were drilled by two different rigs.

In September 2012, a similar CAG report rapped ONGC for hiring the deep-sea drilling rig Dhirubhai Deepwater KG-1 (DDKG-1) in May 2009 without calling for competitive bids and on untenable grounds.