How to nullify CAG Audit Para – A Case Study of Pricing & Treatment of Liquid Stream at Tapti Platform
Background
For development of small and medium-sized discovered oil and gas fields, bids were invited in 1992 and Government awarded the Mid & South Tapti contract areas, which were discovered by ONGC, to a consortium comprising of Oil & Natural Gas Corporation (ONGC), Reliance Industries Limited (RIL) and Enron Oil & Gas India Ltd (ENRON) under a Production Sharing Contract (PSC). The PSC was signed in December 1994 between the Government and the Contracting parties. The Contracting parties formed an unincorporated joint venture (JV) called PMT JV. In February 2002, British Gas Exploration and Production India Limited (BGEPIL) acquired ENRON's 30 percent stake in the JV and became a party to the PSC. Presently, the field is jointly operated by ONGC, RIL and BGEPIL.
Mid & South Tapti Contract Area was developed in two phases viz., Initial Plan of Development (IPOD) and New Revised Plan of Development (NRPOD). The IPOD project was executed during 1995 to1997 wherein JV installed three wellhead platforms viz. STA, STB, STC in South Tapti field along with associated processing & transportation facilities. The NRPOD project was executed during March 2005 to August 2007 wherein JV installed one wellhead platform MTA in Mid Tapti field, and additional processing and transportation facilities for handling increased production. JV installed one wellhead platform STD in South Tapti field in August 2006 to maintain the plateau gas production.
For evacuation of Gas produced from Tapti field and associated liquid hydrocarbons, the development plan annexed to the PSC provided for installation of one export gas pipeline from Tapti field to Hazira and onshore re-separation facility. The gas was to be delivered to GAIL at downstream of the Seller’s onshore Gas receiving facility in the Hazira area and at the upstream weld of the connection to the Buyer’s pipeline in the Hazira area.
Accordingly, in the initial development plan, submitted by EOGIL, calls for an 111 Km, 18†diameter pipeline from Tapti process platform to Hazira, with facilities for condensate separation from gas, its stabilization by flashing to atmospheric pressure, metering & pumping to condensate storage tankage. The flashed gas off the condensate was to be compressed and recombined with sales gas for injection directly into the GAIL's distribution system.
Thereafter, to optimize the gas export alternatives including condensate handling at ONGC/ RIL processing facilities at Hazira, EOGIL (operator of JV) proposed three pipeline alternatives and recommended attaching to ONGC system provided ONGC agrees to a reasonable tariff.
Accordingly, Management Committee in its meeting held in December 1995 resolved to connect the Tapti platforms with ONGC's existing 36"/42" offshore gas pipeline system by an 18" gas pipeline rather than building a new pipeline directly to Hazira.
However, no agreement could be reached on (i) the framework of the transportation and processing agreement to provide priority transportation for the Tapti gas and (ii) the tariff for use of the pipeline between the tie-in point and Hazira.
At the instance of the Government, a Memorandum of Understanding (MoU) was entered, into on 21st June 1997 for a period of 4 months, prior to the Tapti start-up that provided for an interim tariff of US$ 0.18 per Mcf plus a transportation loss of 1% and deduction of 5% condensate. This MOU was subsequently extended several times. In clause 5 of the MOU, the JV partners had stated “......the parties acknowledge and agree that the foregoing interim deduction of 5% of the number of BTUs contained in condensate is a special temporary procedure undertaken during the term of MOU pending final agreement between Shipper (i.e. ONGC) and the Government of India on the disposition and fiscal treatment of condensate produced in the Mid & South Tapti contract area.â€
Gas deliveries from Tapti gas started on 26th June 1997. At the instance of the Government, an ‘interim arrangement’ was made whereby ONGC retained the JV condensate and in turn delivered its own gas to GAIL (India) Limited on energy (MMBTU) equivalent basis. GAIL was paying for the total MMBTU of gas to the JV as per the PSC gas pricing mechanism. ONGC, in turn, was using the JV condensate for extraction of value-added products (VAPs) viz., Naphtha, Superior Kerosene Oil (SKO), Liquefied Petroleum Gas (LPG) etc., at its own plant at Hazira. This arrangement continued till 31 March 2005.
Pricing and Treatment of Liquid Stream
The gas wells at Tapti field, are regulated by wellhead choke valves. After the choke, there is a drop of pressure and the temperature of the well fluid. Production from various wells is collected to a common header and then is fed to a processing facility. This phenomenon of surface handling of gas leads to condensation of heavier hydrocarbons from the gas and thus liquid hydrocarbon is generated at the Tapti Process Platform (TPP).
Process facilities at TPP includes facilities to separate liquid hydrocarbon and gas from well fluid at high pressure, process both the streams for the dehydration and transport the same after metering (separately at pressurised condition) together through single pipeline from TPP to Tie-in point and thereafter through Bassein - Hazira trunk pipelines to Hazira along with gas and condensate from fields of ONGC.
One of the important issue to be resolved was pricing and treatment of liquid stream i.e condensate at Tapti platform, prior to arriving at agreements for ‘Gas Transportation & Processing’ and ‘Gas Sales & Purchase’. The details of the issue are given below:
1. Pursuant to provisions of PSC (Article 1.18), condensate are those low vapour pressure hydrocarbon obtained from natural gas through condensation or extraction and refers solely to those hydrocarbons that are liquid at normal surface temperature and pressure conditions. However, the liquid hydrocarbon separated at TPP is under pressurised conditions and can neither be brought nor measured at normal temperature and pressure conditions at TPP (as per definition of condensate given in PSC), with the existing facilities installed at TPP.
2. During transportation from Tapti platform to Hazira facilities, the commingled stream of liquid hydrocarbon and gas received from Tapti field, mixes with Condensate and gas streams being transported from offshore fields of ONGC and further condensation takes place in the sub-sea pipeline. Thus, the initial quantity of liquid hydrocarbon generated from Tapti gas and delivered at Hazira Terminal varies and there are no means of ascertaining through any physical measurement, the actual quantity of the liquid hydrocarbon generated from the Tapti gas and delivered at Hazira.
3. Due to constraints of measurement of the exact quantity of liquid hydrocarbon generated from Tapti gas and interpretation of the definitions given in PSC, an issue was raised whether to consider these liquid hydrocarbons as natural gas, crude oil, or condensate for pricing purpose, royalty, and other statutory payments. However, the issue couldn't be resolved during preliminary meetings amongst ONGC, GAIL, and DGH.
4. Meanwhile, EOGIL, the Operator of Tapti field took the matter with MOP&NG, to nominate Government’s nominee for the purchase of condensate to be produced from Tapti field. Ministry vide its letter dated 1st May 1997, sought ONGC's views on the issue. ONGC vide its letter dated 26th May 1997 conveyed that Gas Authority of India (GAIL) may be designated as Government's nominee for Tapti condensate.
5. The matter was further discussed amongst MOP&NG, DGH, ONGC and GAIL in a meeting held on 3rd June 1997 and it was noted that Tapti PSC provisions are open to differing interpretations with respect to dealing with liquid hydrocarbon. It was, therefore, felt that for the purpose of MOU for sale of Tapti gas, the high-pressure liquid stream at Tapti Process Platform may be considered as gas and taken over from JV in terms of BTUs; and redelivered to GAIL in equivalent quantity of gas (to be substituted with ONGC gas), after deducting 5% on provisional basis, in addition to the 1% interim ad-hoc deduction towards transportation and processing loss and further DGH, with the help of Engineers India Limited (EIL), would work out what is the most appropriate alternative for the Government to deal with the high-pressure liquid stream. It was also decided that the provisional 5% deduction would be adjusted between the parties suitably after Ministry takes the final decision.
6. Accordingly, an MOU was signed between ONGC and JV for transportation of gas and associated condensate in June 1997. Production of Tapti Gas commenced from 26th June 1997.
7. Subsequently, vide letter dated 7th July 1997 ONGC requested MOP&NG to resolve this issue so that Gas Transportation & Processing agreement could be finalized between ONGC and JV.
8. The issue was again deliberated in a meeting held with the Ministry on 12th December 1997 wherein representatives of ONGC, GAIL and EIL were also present and it was decided that ONGC was to indicate their view on the issue.
9. ONGC vide its letter dated 6th January 1998 conveyed its view to the Ministry that the liquid hydrocarbon from Tapti field be treated as gas.
10. Thereafter, MoPNG in January 1998, moved an internal note and brought out that ONGC and EIL felt that there would be some administrative problem in treating condensate at Hazira. Whereas, EOGIL; the operator of Tapti JV field, had informed MoPNG that Tapti condensate may be treated as gas and even if the condensate is treated as crude oil, no cess and royalty applicable to crude oil would be payable by them. As there was no clear opinion on the treatment of condensate as crude oil or gas, MoPNG referred the matter to the Law Ministry for legal interpretation of provisions of PSC and provisions of law. The law Ministry, in turn, replied that as the matter referred was of technical nature and MoPNG at first instance may examine the issue and give its comments.
11. As per directives from MOP&NG, a joint meeting between ONGC, DGH & EIL was held on 13th & 14th April 1998. After detailed deliberations in the meeting on the definition of condensate, crude oil and natural gas under Tapti PSC, the committee had following interpretation;
‘The well fluid produced at Tapti field contains hydrocarbons which fall under the definition of natural gas and condensate due to their being vapour phase and liquid phase respectively at normal temperature and pressure conditions. However, these hydrocarbons are not separated at the platforms at normal temperature and pressure conditions as the processing facility is not designed for such separation at the platform. Condensate as defined in the PSC is not being obtained at Tapti platform and hence it cannot be measured as a separate product. By installing a liquid chromatograph in addition to the existing, it would be possible to assess the extent of hydrocarbon in well fluid that would remain in liquid phase at normal temperature and pressure. However, it is an indirect method and may not be very accurate. If this condensate is to be obtained as a product on Tapti platform the stabilization facilities to bring the condensate to normal temperature and pressure conditions and other facilities as deemed necessary would need to be ascertained from the operator’.
Accordingly, it was concluded that Condensate as per provisions of the PSC cannot be sold to a nominee as the same is not available as a product in the present scenario. Hence identifying a part of the production as condensate and part as gas is not feasible and the only logical way of measuring the production from Tapti field is in terms of equivalent energy. Since condensate is not available as the product in terms of PSC, it is not possible to address related issues such as nominee, prices etc.
12. During March 1998, EOGIL on issue of finalization of Tapti Gas Sales Purchase Agreement (GSPA) intimated to the DGH/MoPNG that JV was willing to sell the condensate either on MMBTU equivalent basis or condensate itself, but in either case at the international prices established in and on terms of conditions consistent with the PSC. Thus, Tapti-JV was willing to sell Tapti condensate at MMBTU equivalent basis i.e. gas price as per PSC. However, GAIL was not willing to accept the Tapti condensate at MMBTU equivalent basis, as ONGC was retaining the JV condensate and in turn delivering its own gas (which was being purchased by GAIL earlier on subsidized rate) to GAIL on energy (MMBTU) equivalent basis.
13. MOP&NG convened a meeting with EIL, DGH and ONGC on 6th May 1998 on the treatment of liquid hydrocarbon as Oil or Condensate wherein it was decided that EIL would carry out analysis in the different scenario and thereafter, the issue would be discussed further. Accordingly, EIL submitted its report during July 1998.
14. Considering the importance of the matter, MOP&NG vide its letter dated 29th July 1998 requested ONGC & GAIL to nominate the suitable officer to study the EIL report and work out pricing calculations under two options.
a) Condensate being treated as gas
b) Condensate being treated as condensate.
Accordingly, a committee consisting of representatives from GAIL & ONGC was constituted. Thereafter, JS(E), convened a meeting on 9th September 1998 directing the representatives of ONGC & GAIL, to study the above-mentioned options and find out which option gives maximum Government take. The team submitted its report to MOP&NG on 15th December 1998.
15. In 2002, EOGIL stake was purchased by British Gas Exploration and Production India Limited (BGEPIL).
16. During a progress review meeting of PMT-JV held in November 2003 by MoPNG with PMT-JV partners, DGH and GAIL, Joint Secretary, MoPNG informed that in case any party has problem with existing arrangement of treatment of Liquid stream as gas, it should send its suggestions/proposal to DGH, else, the existing system would continue.
17. At the instance of MoPNG, EIL carried out the simulations for the well fluid composition for Tapti gas field as furnished by ONGC. EIL, in its report of March 2005 had stated that condensate was not present at reservoir conditions, was generated at the wellhead conditions and was in vapour form even at a temperature of 42.7oC. On examination of the behavior of the Tapti well fluid at reservoir and wellhead conditions and the definition of condensate as given in the PSC, EIL concluded in March 2005 that condensate obtained from Tapti gas field can be treated as gas. MoPNG accepted EIL recommendation in April 2005.
From the above, it is evident that the issue of treatment of Liquid Stream from Tapti field was examined by the various technical bodies working under MoPNG who opined that it can be treated as gas and same was also agreed to by the MoPNG.
Settlement Agreement
On 31th December 2005, ONGC entered, into a Settlement Agreement (effective from 1st April 2005) with Panna-Mukta and Tapti (PMT) JV on the pricing of condensate at crude oil price including other related issues like fixation of transportation and processing charges and delivery point etc. ONGC apprised its Board of Directors on 3rd March 2006 on Settlement Agreement. Accordingly, the proposal to value condensate at crude oil price under the Settlement Agreement was approved by the Board in March 2006.
Audit by CAG
The Controller Auditor General of India (CAG) in its audit para 13.5.1 of Report No. 9 of 2009-10 pointed out that in December 2005, ONGC entered, into a ‘Settlement Agreement’ (effective 1 April 2005) with PMT – JV. In March 2006, it apprised its Board of that on valuing the condensate at crude oil price, ONGC would gain Rs.131 crore (US$29.11 million) in terms of the value of Value-added products (VAPs) to be extracted from the condensate production profile of 2.021 MMT for the period from April 2005 to 2019. The proposal to value condensate at crude oil price under the Settlement Agreement was approved by the Board in March 2006.
Audit observed that the decision of the Company to purchase condensate at crude oil price was inconsistent with the directives (May 1998) of MOPNG to treat the condensate as gas. MOPNG had reiterated its decision in November 2003 and informed the JV that the existing system would continue. Further, a study conducted (February 2005) by Engineers India Limited at the instance of MOPNG also concluded (March 2005) that condensate obtained from Tapti field could be treated as gas which was accepted (April 2005) by the MOPNG. Besides, the Company was valuing the condensate generated from its own Bassein gas field at gas price and paying royalty as applicable to gas. The Company’s decision to treat condensate as crude was imprudent as it had resulted in a loss of Rs.853.09 crore (up to March 2009) to the Company. Considering the average price paid for condensate (i.e., US$69.56 per barrel), loss to the Company over the remaining contract period (2009-2019) was estimated at Rs.1091.58 crore. The net gain of Rs.131 crore on the VAPs apprised to the Board was in fact loss of Rs.202 crore (US$45 million) as the Company had not considered the subsidy element on domestic LPG and SKO which it was bearing as per the Government directives.
Deliberation in Committee on Public Undertakings
The Committee on Public Undertakings (2010-11) had selected the Audit Para No. 13.5.1 of C&AG’s Report No. 9 of 2009-10 for detailed examination. However, the examination of the Subject could not be completed during the term of the Committee on Public Undertakings (2010-11). The Committee on Public Undertakings (2011-12 & 2012-13) reselected the subject and further continued the examination. The Committee (2012-13) took oral evidence of the representatives of ONGC and MoPNG on 6th August 2012 and 1st October 2012. However, the examination remained inconclusive during the terms of the Committee on Public Undertakings (2011-12 & 2012-13).
The Committee on Public Undertakings (2013-14) again selected the Subject to complete the unfinished task. The Committee considered and adopted the Report at their Sitting held on 7th January 2014 and presented to Lok Sabha and laid on the table of Rajya Sabha on 5th February 2014. The observations /recommendations of the committee are summarized below;
1. The Committee are distressed to know the serious deficiencies in a commercial contract entered into between the Government of India, ONGC, RIL and BGEPIL (formerly EOGIL). The PSC devised by ONGC did not provide for disposal of Tapti condensate and there was no separate pricing mechanism for condensate. The PSC was also silent about the appointment of Government nominee for purchase of the condensate and there was also no clarity in the PSC about delivery point of condensate which led to different interpretations.
The Committee deplore the lapses on the part of ONGC and urge ONGC and the MoPNG to exercise extreme care in future and ensure that there are no shortcomings in commercial contracts.
2. The lacunae in the PSC with regard to disposal and pricing of condensate led to an interim arrangement whereby ONGC retained the JV condensate and in turn delivered its own gas to GAIL on energy equivalent basis as per the PSC gas pricing mechanism. The fact that the interim arrangement, made at the instance of the Ministry of Petroleum & Natural Gas, continued for almost seven years (i.e. from May 1998 to March 2005) shows the apathy with which the matter has been handled. The Committee feel that ad-hocism on the part of MoPNG in such a crucial matter is inexplicable. It is only in December 2005; the interim arrangement was replaced by a ‘settlement agreement’ which was signed between ONGC and JV partners.
3. ONGC is the transporter and processor of JV gas and its issues on fixation of transportation and processing charges were outstanding with the JV partners. The JV partners (viz., RIL and BGEPIL) insisted on valuation of condensate at crude oil price as a precondition for settlement of JV gas transportation and processing charges. ONGC entered a ‘settlement agreement’ on 31 December 2005 (effective 1 April 2005) with JV partners which fixed pricing of condensate at crude oil price and resolved other issues like transportation and processing charges and delivery point, etc. The Committee see no reason why the issue of fixation of transport and processing charges was linked to valuation of condensate. Since the ONGC was legally entitled to receive transportation charges for JV gas, it should have gone for independent amicable settlement or gone in for arbitration in the matter, particularly in view of Law Ministry’s opinion that JV is liable to pay transportation charges to ONGC.
4. ONGC justified its decision to value condensate at crude oil price based on Article 19.11 of the PSC. Audit relying on the proviso to Article 1.18 of the PSC, took the stand that condensate could be treated as crude oil only if the conditions laid down in the provision are fulfilled. The Committee feel that the provision to Article 1.18 which deals with the condensate from an oil field is not relevant in this case, as Tapti is a gas field and not an oil field. The definition of ‘condensate’ in Article 1.18 and pricing of condensate as stipulated in Article 19.11 are relevant.
5. The Committee noted that the joint meeting held on 13-14 April 1998 (at the instance of MoPNG), wherein representatives of ONGC, EIL and DGH were present had inter-alia concluded that ‘the well fluid produced at Tapti field contains hydrocarbons which fall under the definition of natural gas and condensate due to their being in vapour phase and liquid phase respectively at normal temperature and pressure conditions.’ It is also noteworthy to mention that a Committee constituted by the MoPNG in September 1998 comprising senior technical experts of GAIL and ONGC concluded that the composition of Tapti Gas Condensate matches almost with light stabilized crude oil and pointed out that ‘gas condensate is not being treated as gas internationally.’ The Committee note that barring problems in separation and measurement of the condensate, the interpretation arrived at by these bodies with respect to properties of condensate broadly conforms to the definition of condensate given in Article 1.18 of the PSC. Further, the legal opinion of Additional Solicitor General in this regard states that ‘the price of the condensate produced from Mid & South Tapti Contract area is necessarily to be fixed under Article 19 of the PSC which means that Article 19.2 to 19.10 have to be applied, with the modification that the price has to be fixed with reference to the price of condensate and not of crude oil’ also broadly conforms with the interpretation of ONGC. Taking into consideration the various views of the expert bodies and also given the fact that there is no separate pricing mechanism for condensate in the PSC, the Committee feel that condensate produced from Tapti Gas field (as defined in article 1.18) could not have been valued other than in accordance with Article 19.11.
6. Though EIL study of 2005 concluded that condensate should be treated as gas, the Ministry of Petroleum & Natural Gas had categorically stated that EIL Report has not been accepted by them as it was not required as per PSC. However, Audit has contended that the Ministry had accepted EIL recommendations. The Committee, however, are of the view that as per PSC, ‘gas’ and ‘condensate’ are two different products with different characteristics and ‘one’ cannot be treated as ‘the other’.
7. What irks the Committee is that the ‘settlement agreement’ in 2005 was made by ONGC without prior approval of the Board of Directors and without the approval of the Ministry of Petroleum & Natural Gas which was the first signatory to the original production sharing contract. Since the ‘settlement agreement’ with huge financial implications replaced the operational interim arrangement which had been devised at the instance of the MoPNG in 1998, propriety demanded that prior approval of the Board of Directors and the MoPNG was taken before implementation of the ‘settlement agreement’. It is regrettable that even the MoPNG ignored the question of propriety in the matter and drew satisfaction from the fact that Panna-Mukta & Tapti JV intimated them of the developments expost facto. The Committee hope that there will be no repetition of such lapses in future.
In its response to the observations /recommendations of the Committee, Government in its Action Taken Report, replied that observations have been noted and due care will be taken to avoid such shortcomings, in future. The Committee on Public Undertakings (2014-2015), then, considered the draft Action Taken Report in their sitting held on 28th January 2015 and no further recommendations were proposed. The report was presented to Lok Sabha on 19.03.2015 and laid on the table of Rajya Sabha on 19.03.2015. Thus, the Audit para was resolved.
Conclusion
The Committee on Public Undertakings is the only authority empowered to examine the CAG audit paras and put its observations and recommendation to Lok Sabha and Rajya Sabha. However, a detailed examination of the whole episode raised following questions which also needs public scrutiny;
1. The Committee on Public Undertakings (2010-11) selected this Audit Para for detailed examination. As the examination remained inconclusive, the committee of 2011-12 & 2012-13) reselected it and again, being inconclusive, reselected by the Committee in 2013-14. The oral evidence was taken on 6th August 2012 and 1st October 2012. The Committee considered and adopted the report at their Sitting held on 7th January 2014. It is not clear why such a delay even after completion of oral evidence.
2. The Committee observed the serious deficiencies in PSC, as it did not provide for the disposal of Tapti condensate and there was no separate pricing mechanism for condensate. However, the author feels there was no such deficiency in the PSC. As per development concept, given in PSC, the liquid hydrocarbons extracted at Tapti field was to be transported along with gas through a JV owned pipeline to onshore where these liquid hydrocarbons were to be separated from gas, stabilized for making it a sellable product; condensate, metered and store prior to sale. However, at the recommendation of EOGIL, JV decided to transport the gas along with liquid hydrocarbons through ONGC owned pipeline and did not installed any such facility to stabilize condensate. For such a decision taken during execution of PSC, it is not correct to blame that there were serious deficiencies in the PSC.
3. The observation of the committee at point 4, that provisions of Article 1.18 (which defines the condensate), are not relevant as it deals only with condensate received from oil fields only is not completely correct. Probably, the committee is referring the condition that it is segregated and separated separately to the delivery point. The committee is silent on the main provision, given in Article 1.18 for defining it as condensate related to normal temperature and pressure. The issue is neither hydrocarbons are separated at the platforms at normal temperature and pressure conditions nor the separated liquid hydrocarbons are stabilized at normal temperature and pressure, as the Tapti processing facility is not designed for such separation at the platform. If these liquid hydrocarbons obtained at the Tapti platform are to be defined as condensate, the stabilization facilities to bring it to normal temperature and pressure conditions and other facilities as deemed necessary would need to be installed.
4. The committee at point 5 above, has observed that taking into consideration the various views of the expert bodies and also given the fact that there is no separate pricing mechanism for condensate in the PSC, the Committee feel that condensate produced from Tapti Gas field (as defined in article 1.18) could not have been valued other than in accordance with Article 19.11. However, this fact can also not be ignored that the term ‘condensate’ was examined by the various technical bodies working under MoPNG, and they opined that liquid hydrocarbons obtained at Tapti are not stabilized product, to be termed as condensate (as defined in article 1.18) and hence can be treated as gas and same was also agreed to by the MoPNG.
5. As per MoU entered between JV and ONGC on 21st June 1997 (after approval of ONGC Board), the disposition and fiscal treatment of condensate produced was to be agreed between Shipper (i.e. ONGC) and the Government of India which implies that JV agreed to dispose the liquid separated at TPP on MMBTU equivalent basis (i.e. as gas). Again, during March 1998, EOGIL on issue of finalization of Tapti Gas Sales Purchase Agreement (GSPA) intimated to the DGH/MoPNG that JV was willing to sell the condensate either on MMBTU equivalent basis or condensate itself, but in either case at the international prices established in and on terms of conditions consistent with the PSC. Under such circumstances, there should not be to be any dispute on this issue, which was earlier agreed by JV. Therefore, it is surprising to note that ONGC entered a settlement agreement with JV on 31st December 2005, to purchase the separated liquid hydrocarbons at TPP as Condensate instead of gas against government directive & its own business interests and without prior approval of both ONGC Board & the Government. Prima-facia, role of ONGC executives appears to be suspicious in this case and points out towards a conspiracy. Instead of strict action against the culprits, the committee remarked that it is regrettable and hoped that there will be no repetition of such lapses in future.
It is pertinent to bring out that Natural resources vest in the people of the country and are held by the Government in the trust for the people. Any utilization or exploitation of these resources should be subject to the doctrine of public trust and must be administered solely in the interest of the beneficiaries ‘we the people’, a fundamental principle of our constitutional set up.
To safeguard the doctrine of public trust, Controller and Auditor-General has also been assigned the mandate under the constitutional provisions to audit the Accounts and performance of the Union and States. Therefore, any examination or resolution of an audit para must be based on grounds or reasons of public trust, security or the national interest. Moreover, any public servant or establishment not performing in contractual provisions and national interest, based on such audit, must be disregarded and deemed action be initiated at the outset instead of rejecting or nullifying such Audit Para.
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