Furious Pradhan declares war on 'sloppy' DGH

Vol 18, PW 24 (30 Jul 15) People & Policy

Arrogant, sometimes rude, DGH officials are arbitrarily imposing heavy penalties on operators and discouraging foreign explorers from India.

But the good news is oil minister Dharmendra Pradhan has reprimanded the DGH and given it one month to produce a firm policy on calculating the cost of an unfinished work programme. Pradhan's anger was evident during a ministry meeting on July 21 with DGH officials.

"He was very upset," says an eyewitness. "He asked the DGH why so many problems are pending with operators." He adds ONGC, Oil India, Reliance Industries, Dart Energy and Adani Welspun are among several E&P operators embroiled in disputes over how to calculate the cost of unfinished work programmes and liquidated damages.

"Joint secretary exploration UP Singh (who attended) was less charitable with his remarks on the DGH," we hear. "He said DGH officers are behaving like income tax or CBI officers!" Singh reportedly said the DGH irrationally levies penalties on operators - if it is supposed to charge Rs5 lakh ($8300) it asks the operator to pay Rs25 lakh ($41,600).

"Such actions force operators to seek arbitration," he said. An ONGC officer adds there are numerous cases where the DGH has levied penalties on a company for millions of dollars without checking the rules.

In another case Reliance faces a $205m penalty for unfinished work at eight NELP blocks relinquished last year (2014).