Oil ministry tells hydrocarbons chief he has no financial powers

On all issues that have monetary implications, the ministry has made it amply clear that the DGH’s role is merely recommendatory.

“DGH needs to make recommendation to the Government on all payment matters,” says the ministry’s letter, implying that the upstream regulator cannot suo motu approve development plan or the profit petroleum exploration firms pay to the Government after recovering their costs.

Last month, Sibal asked the ministry to clarify the functions and powers of his directorate after the ministry objected to DGH refusing more time to Cairn Energy for an appraisal of two oil discoveries and for fixing fines on Reliance Industries for not fulfilling the committed work programme.

“As regards DGH approving payments for contractors, such as payments towards unfinished committed work programme under the PSC and accepting such payments on behalf of the Government, it is clarified that this falls within the purview of the Government,” writes the ministry.

Last October, DGH fined RIL and Oil & Natural Gas Corp for failing to carry out the seismic survey or drill wells. It also denied six more months to Cairn for appraisal of the oil discoveries in Rajasthan.

When the ministry questioned the DGH’s authority, the upstream regulator cited a Government notification of September 2006 to its advantage. The ministry has issued the clarification after DGH asked for a clear-cut outline of its role to avoid confusion.