The petroleum ministry may soon lose its exclusive decision-making powers in allocating oil and natural gas blocks to companies as the Cabinet Secretariat wants direct involvement and oversight in managing the country?s natural resources.
The secretariat is now working on overhauling the way hydrocarbon blocks are allocated to companies and is regulated through their productive life. In the light of recent scams that put the UPA government on the defensive such as the allocation of telecom spectrum, the government wants its top brass to maintain a penetrating gaze over the resources sector, said a person privy to the development.
The move is inspired by inputs from the Ashok Chawla committee on natural resources which recommended a new upstream regulator and the Comptroller and Auditor General of India?s (CAG) draft audit report on the performance of certain hydrocarbon blocks which criticised the ministry over ?incorrect and irregular? decisions. A section of the government, however, sees the Cabinet Secretariat?s move as an attempt to micro-manage the resources sector and take away the designated ministry?s work.
Now, the petroleum ministry?s technical wing ? the Director General of Hydrocarbons ? evaluates technical and financial bids placed by exploration companies seeking blocks. Winners are selected on the basis of minimum work programme they commit and the financial package or the profit-sharing formula they offer. The idea is to encourage companies to do more exploration work and offer the best profit-sharing deal. Input from the law ministry is sought on individual bidders? eligibility and the final award of the block is cleared by the Cabinet.
?This process is very much transparent and the actual allocation of blocks is made by the Cabinet,? said a petroleum ministry official, who asked not to be named. Except one instance of award of a particular block to an overseas company in the recent past, there has not been any complaint from the industry about allocation of blocks, said another official.
However, the political leadership could not ignore the wide negative publicity from CAG?s performance audit of certain blocks. The draft CAG report said that undue benefits were granted to certain contractors and that the ministry and the DGH failed in paying adequate attention to protecting government?s financial interests at every stage of exploration and production with a ?hawk?s eye?. The CAG also said the government and the upstream regulator had constraints of skilled manpower for individually monitoring hundreds of contracts with various companies.