After ONGC case fallout, Oil ministry tells PSUs not to drag govt to court

The petroleum ministry plans to issue an order to all its public sector undertakings not to file court cases against the government following a writ petition last May by Oil & Natural Gas Corporation charging the ministry of acts of omission and commission in an alleged theft of ONGC’s natural gas by Reliance Industries Ltd.

Suitable instructions may be issued to Central PSUs under this ministry, so that such an eventuality viz CPSUs under the ministry having to file a court case against the ministry (itself alleging non-performance) may not arise in future…, additional secretary Rajive Kumar proposed last month. The step was later approved by petroleum minister Dharmendra Pradhan.

Kumar’s recommendation followed a ministerial enquiry into whether ONGC had consulted the ministry before filing the writ petition against its largest stakeholder the Union of India and upstream regulator Directorate General of Hydrocarbons.

The ministry’s probe showed that the then joint secretary (exploration) Armane Giridhar “was aware about the decision to file the writ, though he may not have been fully aware about its fallout viz the government being made the first respondent”.

Armane, who was also a member of ONGC board which took the decision on April 24, 2014, had suggested that “only referring the matter to the Government of India may not be of much use as GoI would be seen as interested party and a conflict of interest could arise”.

ONGC subsequently filed the petition in Delhi High Court alleging theft of 18 billion cubic meters of natural gas since 2009 by RIL from adjacent ONGC blocks in Krishna Godavari Basin.

It claimed theft occurred due to lack of vigilance of the DGH and the ministry and their failure to take precautionary steps. It also accused the ministry and RIL for not adhering to the globally-accepted joint development mechanism that is provided in the production sharing contract signed between the government and RIL for Block KG-DWN-98/3.

Calling it “signs of systemic failure”, then petroleum minister M Veerappa Moily ordered an enquiry and to “fix accountability either within the ministry, DGH or ONGC for mishandling the matter and allowing it to escalate to this level”.

“It will be absolutely necessary to examine at what level this decision (to file writ petition) was taken in the ONGC and why ONGC did not feel it appropriate to give an advance intimation / notice to the ministry before taking such a drastic step,” Moily had directed.

Sidestepping the issue, Kumar wrote on October 3: “At this stage, when the matter is before the court and the opinion of the technical expert (to establish the continuity of reservoirs) relating to ONGC’s claim is still not known, we may in this particular case await the outcome of their finding.”