ONGC paid Rs18,626 cr in excess subsidy on overstated crude output: CAG

The Comptroller and Auditor General has said ONGC over-reported its output by including condensate and off-gas output while referring to its method of measurement of crude production.
In a report titled ‘Crude Oil Production Measurement and Reporting System in ONGC’ tabled in Parliament on Monday, the government auditor said ‘condensate’ and ‘off gas ‘ ought not to be reported as ‘crude oil’ production. It said the inclusion of condensate and off-gas led to additional subsidy burden of ₹16,331 crore and ₹2,294 crore, respectively, during the period 2011-12 to 2014-15.
The subsidy is calculated by multiplying the reported crude production (measured in barrels) with the per barrel price of oil ($56). This formula was used to calculate ONGC’s share of subsidy between 2011-12 till September 2014. For the third quarter of 2014-15, the subsidy rate was revised to $37.5/barrel and then to zero for the last quarter.
The CAG’s view that condensate and off-gas should not be counted in crude oil production was also strengthened by the replies the company management gave the auditor. “The significant implication of inclusion of condensate for determination of ONGC’s share of under-recoveries has been taken up by the government. ONGC had appealed to the government that in future only crude oil quantity be considered for determination of ONGC’s share of under-recoveries…,” the CAG report quoted ONGC’s reply.

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