Messy finance system at ONGC
ONGC is having a rethink about moving into the second phase of its grand plan to centralise its billing and payments system.
On April 5 (2024), chief financial officer and executive director KC Ramesh sent a notice saying Phase-Il of the much-talked-about centralisation project is indefinitely deferred until "full manpower" can be posted in the Shared Finance Services (SFS) department. "Executive Committee (EC) of ONGC in its 587th meeting had approved the creation of a Shared Finance Services (SFS) for centralised processing of vendor invoices with the support of Shared Service Centre Partner (SSCP) from Noida," writes Ramesh.
"Accordingly, Phase-I has gone live from December 14 (2023) and is still under stabilisation (it has yet to settle down and deal with all teething problems)." He adds that the following activities will now continue to be managed by work centres in different regions instead of by the new central department in Noida: opening an LC (Letter of Credit), LSC (Letter of Short Credit) and processing related payments; and maintaining details of the vendor's bank account, tax details and MSE (Medium Small Enterprise) or other status.
Tax filings will continue as before. Work centres will also continue to manage medical services and travel payments, including "HR-related payments like hotel, hospital, doctors, labs, medicines and travel which are being processed in VIMS (Vendor Information Management System)," according to the order.
In January 2024, ONGC faced significant embarrassment with the new system when it mistakenly paid Rs80cr ($9.6m) to Engineers India instead of Rs8cr ($960,000). Several other payments are also said to have been made to vendors without due diligence.
"ONGC's new system at Noida arranged through IBM has not performed as expected," says a source. "That's why management is forced to defer the second phase."