Financial Daily from THE HINDU group of publications
Friday, Dec 16, 2005
Corporate - Corporate Disputes
MoU controversy: DPE panel to study versions of ONGC, Ministry?
New Delhi , Dec. 15
THE ongoing controversy between the Oil and Natural Gas Corporation and the Petroleum Ministry on the signing of an annual memorandum of understanding to lay down performance targets is understood to have been referred to a third umpire.
A high-powered committee of the Department of Public Enterprises (DPE) is now likely to examine ONGC's and the Ministry's versions of the MoU. Sources said that DPE has asked the Ministry to also include ONGC's version on the issue.
Both the Petroleum Ministry and ONGC have different takes on the MoU that is signed each year between the Government and the navratna companies, stipulating production targets for the year. While the Petroleum Ministry maintains that ONGC has not concluded its MoU with the Government for the year 2005-06, the company has said it has signed the MoU in line with the target set by the task force appointed by the DPE.
Maintaining that the signed draft submitted by ONGC was not entirely in accordance with the recommendations of the task force, the Petroleum Ministry had sought advise of the DPE for further action.
The Ministry has been requesting ONGC to work out a revised MoU based on the recommendations of the taskforce of DPE. The Ministry has suggested the inclusion of ONGC's foreign venture and domestic production target for crude/gas profit based on the company's own technical assessment in the MoU.
It was also suggesting that the expected returns from investments made by ONGC through its subsidiary ONGC Videsh Ltd (OVL) should be reflected in the memorandum.
To this, ONGC had responded by saying that the DPE task force approved the performance target the company was committing to in the MoU. According to ONGC, it did not include production from the company's overseas assets.
The ONGC management has proposed a crude oil production target of 27.8 million tonnes but the Petroleum Ministry wanted production from OVL, the company's overseas arm, to also be incorporated and the production target raised to 35 mt.
Quarterly review: Meanwhile, at a meeting held on Wednesday, the top brass of ONGC lead by the Chairman-cum-Managing Director, Mr Subir Raha, and the Petroleum Ministry officials lead by Secretary, Mr S. C. Tripathi, undertook the quarterly performance review (QPR) of the company. No discussion on the MoU took place, sources said. In the absence of a memorandum, ONGC's performance review for the last two quarters had not taken place.
According to the sources, the process of evaluation was considered on the basis of the draft MoU.
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