After being criticised by the Comptroller and Auditor General (CAG) for its functioning and conflict of interest, the upstream petroleum sector regulator, Directorate General of Hydrocarbons (DGH), may soon be strengthened and streamlined.
The DGH has invited bids from international agencies to examine and study 10 upstream regulatory agencies of various countries in different continents and suggest steps to design the most suitable for India.
Of these 10 countries, at least four to five will be those where a production-sharing contract regime is in existence.
“The study will examine the role and function of such agencies, delegation by controlling agency, and their relationship with the administrative authority or ministry. It will submit a detailed report on merits and demerits of various models of different organisations and how they compare with India,” said a government official.
The study, likely to be commissioned next month, will be carried out within 60 days.
The DGH office has faced criticism from other quarters as well, especially during the tenure of V K Sibal. He was charged with rendering undue favour to a private data collection company. The Central Bureau of Investigation had even raided the DGH office and Sibal’s premises last year.
In its performance audit of the hydrocarbon production-sharing contracts last year, the CAG said the roles and functions of DGH encompass two sets of functions with potential conflict of interest — an upstream regulatory function and a function of rendering technical advice to the government of India.
“While in 1993, when DGH was set up, there was lack of adequate clarity on the role and position of regulators in various economic sectors, the need for clear autonomy of sectoral regulators (from the executive) is well recognised,” CAG said.
CAG recommended the functions currently discharged by the DGH be clearly demarcated. The technical advisory and related functions should be discharged by a body completely subordinate in all respects to the petroleum and natural gas ministry, while functions of a regulatory nature like review of hydrocarbon reserves, laying down norms for declaration of discoveries and conducting safety inspections/audits should be discharged by an autonomous body, with an arm’s-length relationship with the government.
Besides, the staff of DGH is drawn on deputation/tenure basis, mainly from upstream and other oil public sector undertakings such as ONGC, OIL, IOC and BPCL.
The DGH was established under the administrative control of the petroleum ministry through a government resolution to promote sound management of the oil and natural gas resources with a balanced regard for environment, safety, technological and economic aspects of the petroleum activity.
It is entrusted with several responsibilities like implementation of New Exploration Licensing Policy, matters concerning the production-sharing contracts for discovered fields and exploration blocks, promotion of investment in exploration and production (E&P) sector and monitoring of E&P activities, including review of reservoir performance of producing fields.
