New Delhi, May 2: The standing committee on oil and gas has sought the audit watchdog’s intervention in an inter-ministry spat on oil cess.

The finance and petroleum ministries are in a tug-of-war over the utilisation of cess proceeds. The petroleum ministry has alleged that the finance ministry was not releasing the proceeds for the development of the oil and gas sector.

Referring the issue to the comptroller and auditor general of India, the committee has said the cess should be used to stabilise oil prices.

In its report to Parliament, the committee said of the Rs 60,000-crore cess collected till September 2006, only “a paltry Rs 902 crore, or 1.41 per cent, has been made available to the Oil Industry Development Board”.

The committee also rejected the finance ministry’s claim that the expenditure of the oil industry was in excess of the cess.

It said the oil industry, as referred to by the ministry, included not only petroleum but also petrochemicals and fertilisers. The expenditure incurred in fertilisers and petrochemicals should not be adjusted against the cess, the committee said.

The report said there was no provision in the 2005-06 budget for capital expenditure in petroleum, whereas a sum of Rs 20,196 crore was allotted as revenue expenditure.

“In the opinion of the committee, the adjustment of accruals from cess against revenue expenditure is not justified,” the report said.

The committee said the petroleum ministry administers the oil PSUs, yet it receives no budgetary support for the companies.

ONGC find

The committee has also asked the directorate general of hydrocarbons (DGH) and ONGC to settle disagreements over procedural matters internally.

Commenting on the face-off between the two, over the PSU’s gas discovery off the east coast, the committee asked the DGH and ONGC not to go public with their differences and to exercise restraint.

ONGC had notified a gas discovery off the Andhra coast after making a preliminary evaluation of the find by carrying out straddle packer mud drill test. The DGH, however, disallowed the discovery in the absence of a conventional test for hydrocarbons. “The committee has found it unfortunate that DGH and ONGC have come out in the open with their differences on a number of issues in the recent past,” the report said.