CAG finds deficiencies in ONGC’s marine logistics operations

Our Bureau New Delhi | Updated on July 17, 2019 Published on July 17, 2019

Raps Nalco for under-production of bauxite

The Comptroller and Auditor General of India (CAG) has red-flagged multiple operational lacuna in marine logistics operations of Oil and Natural Gas Corporation Ltd (ONGC).

The CAG said ONGC had not planned for adequate number of Offshore Supply Vessels (OSVs), resulting in compromise of mandatory safety (standby) duty. Besides, ONGC’s decision to reduce OSVs instead of costlier Platform Supply Vessels (PSVs) increased the cost of marine logistics operations by ₹25.99 crore.

New vessel construction

The CAG also pointed out deficiencies in awarding of new vessel construction contract to an inexperienced contractor solely on the basis of experience of the foreign technical collaborator.

This led to much delay and against scheduled delivery of 12 vessels by December 2011, the contractor could deliver only seven vessels by March 2018, the CAG said.

Among other things, the inordinate delay in finalising tender for hiring of tanker led the company to procure fuel through costlier alternative source leading to additional cost of ₹163.44 crore, the CAG said.

The auditor recommended introducing fixed scheduling of vessels and considering utilisation of Cargo Carrying Units, among other suggestions.

Nalco’s bauxite stock

In another report, the CAG observed that the National Aluminium Company Ltd (Nalco) was unable to maintain the required stock level of bauxite at the refinery-end due to lower production of the same in the mines.

The CAG said the actual production of alumina hydrate from 2012-2013 to 2016-2017 was 96.31 lakh tonnes against the target of 107.35 lakh tonnes, resulting in shortfall of 11.04 lakh tonnes. The shortfall in production was primarily due to under-performance of mining and allied activities.

The CAG also observed that the capacity utilisation of Nalco’s smelter plant remained lower than the installed capacity primarily due to non-availability of adequate power from the captive power plant.

“Nalco was not able to develop the coal blocks allotted by Government of India for supply of coal to the captive power plant for generation of required power for smelter plant.

“There was shortfall in production of 4.93 lakh tonnes of aluminium in the smelter plant during the period from 2012-2013 to 2016-2017 for want of required power. As a result, Nalco lost the opportunity of earning incremental contribution amounting to ₹1,086.63 crore during the above period,” the CAG said.

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Published on July 17, 2019
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