Pandian tells ONGC to spend more in Gujarat

Vol 14, PW 15 (27 Jan 11) Exploration & Production

ONGC is under fire in Gujarat for not spending more on the welfare of local communities.

Gujarat energy secretary DJ Pandian writes in a letter received by oil secretary S. Sundareshan on January 6 that ONGC’s spending on Corporate Social Responsibility (CSR) initiatives should reflect the hefty revenues it earns from the state.

“In spite of substantial contribution from our natural resources,” writes Pandian, “the extent of ONGC corporate initiatives towards the people of Gujarat is not to the level it should be.” Pandian says ONGC is dominant in Gujarat’s exploration sector since 1950 and, “has 90% of the area leased for mining purpose.

” Pandian says Gujarat contributes 23.73% of ONGC’s total crude oil production and 7.791% of its total gas production. Citing ONGC’s 2009-10 report, Pandian said 24% - equivalent to the amount of crude and gas it extracts in Gujarat - of the company’s net profit works out to Rs4024cr ($894m).

As ONGC has earmarked 2% of the annual net profit for CSR, says Pandian, the company should spend at least Rs80.4cr ($17m) a year on CSR in Gujarat, says Pandian. Contacted for a response, ONGC said: “We have replied to this letter.

ONGC pays 20% royalty to the state on the wellhead price. Each asset manager has Rs2cr budget for CSR.

Gujarat says this is not enough, but we also carry out CSR initiatives from our corporate office.” One example, stresses ONGC, is a hospital at Ankleshwar for which ONGC directors have approved an initial amount of Rs75cr ($16m), but for which actual expenditure will be double.

More, ONGC says it has sanctioned Rs64 lakh to fund an intensive care unit at the Vadodara government hospital. “We explore in other parts of the country where there is no production,” adds ONGC.

“And, we must spend on CSR there too.”