Even as the country is infuriated with the big-ticket defaulters pushing the banks to the brink, it is the Gujarat government-run Gujarat State Petroleum Corporation Ltd (GSPC), that has now assumed a dubious distinction of becoming an iconic PSU, burdened with heavy debt and interest payouts being more than ten-times its revenues from oil & gas production.

The latest Comptroller and Auditor General of India (CAG) report on GSPC, revealed that the company had failed to address "properly the risks associated with cost, technology and price in development of the Krishna-Godavari (KG) Block. The Field Development Plan for DDW field did not take into account the fact that the project was not viable at the government-approved gas prices prevalent at that time.." This, according to CAG, resulted in uncertainty regarding the future prospects in the block where the company has invested around Rs 19,576 crore.

CAG report found that GSPC's total borrowings rose by 177 per cent during 2011-15 from Rs 7,126.67 crore to Rs 19,716.27 crore, mainly due to development activities in KG block.

The interest payout increased substantially from Rs 981.71 crore in 2011-12 to Rs 1,804.06 crore in 2014-15. While company's revenues from production fell from Rs 230.30 crore in 2011-12 to Rs 152.51 crore in 2014-15 mainly due to lower oil prices and fall in gas production from 119.24 million cubic metres to 50.21 million cubic metres. Company's Hazira block has been the main producing block with more than 70 per cent contribution to total gas output.

"GSPC has been a centre of corruption. Even after wasting huge money, GSPC has zero commercial production from KG Basin. When Narendra Modi was chief minister in Gujarat, he made tall claims of 20 TCF gas find in KG Basin. In reality, there wasn't even 2 TCF which was recoverable. People are being misguided. Also, the CAG report has noted that GSPC had surrendered 11 blocks overseas and written off about Rs 1,734 crore. Whose loss is it ultimately?" Congress leader and National Spokesperson, Shaktisinh Gohil told BusinessLine.

The apex audit body also noted that GSPC did not exercise its right to conduct audit of its JV accounts, which had outstanding dues of Rs 2,329.52 crore.

In November 2009, GSPC's Management Committee had approved the FDP for Deen Dayal West (DDW) area with commercial production estimated in December 2011. But the trial production could be taken up only in August 2014 and the commercial production is yet to be started.

While submission of FDP, GSPC had assumed gas price of $5.7 per million British thermal unit (mmBtu), but the Central government-approved formula put the gas price at $4.2 per mmBtu. Wrong estimation has escalated the costs. Against the FDP estimates of $547 million, the tender cost for offshore facilities rose to $810 million. But the actual cost stood at $1,058 million.

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