ONGC over-reported oil output by 12%: CAG

Tribune News Service

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New Delhi, August 8

The Comptroller and Auditor General (CAG) in a report has said that ONGC shelled out Rs 18,787 crore in excess subsidy over three years due to over-reporting of its own crude oil production by 12% due to a subsidy formula linked to production, which also resulted in extra payment of performance-related pay to its executives to the tune of Rs 106.51 crore in 2013-14.

In a report tabled in Parliament, the CAG said ONGC over-reported its crude oil production by 12% through inclusion of items like condensate in the output.

The over-reporting has an impact on the subsidy burden to be borne by ONGC. The two upstream companies — ONGC and OIL — have to share the under recovery of oil marketing companies arising from the sale of petroleum products at subsidised rates.

As per the subsidy sharing methodology, the subsidy sharing of the upstream company would be based on its crude oil production.

“Audit of the crude oil measurement and reporting system indicated that the company (ONGC) was reporting partially stabilised crude oil as its crude oil production.

“This led to over-reporting of crude production by including items other than crude oil, namely off-gas, BS&W (impurities) and recoverable internal consumption,” it said.

Out of 132.17 million tonne of crude oil production claimed by ONGC in five years from 2010-11 to 2014-15, as much as 12.1% of over 6 million tonne was over-reported.

“The over-reporting and incorrect reporting of crude oil production has presented an inaccurate picture of performance of the company on crude oil production and has led to the company sharing an additional subsidy burden of Rs 18,787.43 crore during 2012 and 2015,” the CAG said.