Petroleum Ministry has chided ONGC's Rs 25,000 crore project for LNG, power and petrochemicals at Mangalore, saying the investment plan was made without the approval of the government and company board.The ministry wants ONGC to focus on finding oil and gas while leaving the implementation of the Mangalore project to other state-run oil firms.ONGC's MoU with Karnataka government for the Mangalore project "was signed not only without approval of the government/board but also against the specific advice of the ministry," said a Petroleum Ministry note on the subject. The ministry wants ONGC's subsidiary Mangalore Refinery and Petrochemicals to take lead role in setting up of the liquefied natural gas import and regasification plant and petrochemical complex while leaving the power plant for implementation by central power utility."The advantage of executing downstream projects with MRPL is that these can be off the balance sheet of ONGC and non- recourse borrowings can be resorted to in financing these projects," the note said."ONGC should invest more in areas related to its core competence which is exploration and production and in which ONGC's track record over the last few years has given some cause for concern," it said.At Mangalore, ONGC plans to set up a Rs 5000 crore LNG jetty and re-gasification terminal of 10 million tonnes capacity, a Rs 1100 crore c2-c3 recovery plant, Rs 9000 crore basic petrochemical complex, a Rs 4624 crore 1,445 mw power plant and Rs 2000 crore in laying pipelines for transporting gas.The ministry note said the commitments made in the ONGC MoU with Karnataka government should be honoured by the oil industry."ONGC has practically no operations in Karnataka. What needs to be considered is that in case ONGC directly involves itself in the Karnataka project in downstream business activities, it will be difficult to resist similar demands from other state governments, particularly state governments like Assam and Gujarat which are the main producing areas of ongc and from where it earns substantive revenues and to a lesser extent from states like Rajasthan, Tamil Nadu and Andhra Pradesh," the note said.However, the MoU having been presented as a fait accompli it was naturally suggested that MRPL, ONGC's Karnataka based subsidiary was the best available option for the identified projects.Getting MRPL to implement the projects would ensure that "ONGC's abilities to use its own corpus for its high risk core activity of exploration in India and abroad will not be affected," the note said.Internationally, exploration activities are the activities that need to be funded by company's own balance sheets whereas other projects are financed through debt.
