BG under CAG spotlight over Aker contract

Vol 17, PW 13 (13 Feb 14) People & Policy

Anyone wondering why foreign investors hesitate to come to India, here's your answer.

Government auditor Comptroller and Auditor General (CAG) is determined to give BG Group a hard time, as part of a witch-hunt where it is minutely scrutinising the accounts of all pre-NELP and NELP blocks. CAG's audit department sent a preliminary report to the oil ministry on January 23, accusing BG of favouring Oslo-headquartered Aker Solutions at the Panna, Mukta and Tapti (PMT) oil and gasfields, which it jointly operates with Reliance and ONGC.

In its report CAG criticises BG for issuing contracts without tender to Aker between June 2010 and January 2013. Under scrutiny is a $6.85m contract - first issued through a tender - to Aker in June 2008 to hire Christmas trees and well-head equipment for two years.

BG then extended the contract till June 2011 at an additional cost of $1.08m without a tender on the grounds that the requirement was urgent and the lead time for the supply of materials was around six months. CAG's report says: “Considering the requirement for the well-head and Christmas trees was a regular feature the JV should have invited a tender before the end of the original contract period.

” BG hired Aker again in June 2011 and once more in January 2013, again without tender, but this time for 9.5% higher than the previous contract.

LNG Summit