Assembly panel raps Gujarat State Petroleum Corporation over Rs 500 cr loss in KG Basin block project


PTI | Gandhinagar | Updated: 22-09-2022 09:24 IST | Created: 22-09-2022 09:24 IST
Assembly panel raps Gujarat State Petroleum Corporation over Rs 500 cr loss in KG Basin block project
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A Gujarat Assembly committee has criticised the Gujarat State Petroleum Corporation over a loss of nearly Rs 500 crore in a drilling work in Krishna Godavari (KG) Basin block, saying it could have been avoided if the state government-controlled entity worked in a ''responsible and vigilant manner''.

The Public Enterprise Committee, which monitors state-run public sector undertakings (PSUs), in its report tabled in the House on Wednesday, also noted that contradictions in the company's written literature and oral submissions of senior officials before the panel reflect GSPC's ''irresponsible approach''.

The committee, headed by Bharatiya Janata Party MLA and former Gujarat Minister of State for Home Pradipsinh Jadeja, has 14 members including from the ruling BJP and opposition Congress.

The panel scrutinises observations made by the Comptroller and Auditor General on PSUs and makes recommendations to the state government.

The committee said the Comptroller and Auditor General of India (CAG) in its audit report tabled in the Assembly in 2017 observed that an ''operational error'' in drilling an offshore gas exploration well had cost Rs 500 crore to the state-run GSPC.

The CAG was referring to the faulty drilling work carried out by the GSPC in one well, named KG-21, in the KG Basin (Krishna Godavari Basin). The CAG noted that it happened because the said well was drilled outside the template and the company realised it much later.

As per the CAG audit report, the company had incurred an expenditure of Rs 478.98 crore on the offshore drilling work at the KG-21 offshore well. In addition, the GSPC had to spend an additional Rs 34.37 crore to make some adjustments due to the faulty work.

In its written response submitted to the Assembly panel, the company had said commercial production of gas from this well was not possible. However, company officials told the committee orally that the drilling was successful because GSPC found gas in it, the panel said in its report submitted on Wednesday.

''This contradiction in responses reflects the company's dishonesty in presenting facts before the panel. According to officials, the well was drilled outside the template because of an error of judgement by a diver (who went in the water for technical work related to fitting template), which had cost the company Rs 500 crore,'' the report said.

In the meeting with committee members in August 2021, senior company officials informed the panel that further development of the well will be done by the Oil and Natural Gas Corporation, as the GSPC has given operatorship of KG-21 and five other wells of DDW (Deen Dayal West) region to the ONGC in April 2017.

Expressing displeasure about the written and oral submissions of the officials, the panel said the company's response reflects its ''irresponsible and impractical approach''.

''This wrongful expenditure on KG-21 could have been avoided if the GSPC had worked in a responsible and vigilant manner for this project. Such an error occurred despite the company having expert and competent officials. We see this as sheer incompetence of the GSPC,'' the panel said in its report.

The committee further recommended that responsibility of officials and technical experts should be fixed in case of occurrence of such errors.

''It is clear that company officials had worked in an irresponsible manner. Because of their minimal monitoring and lack of expertise, the exploration site got changed. Instead of taking the responsibility, they held a diver responsible for this error, which had cost Rs 500 crore. This approach by officials is inappropriate,'' the committee said in its report.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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