CAG raises questions on KG asset valuation

The Comptroller and Auditor General of India (CAG) has raised question marks on the valuation of Gujarat State Petroleum Corporation's (GSPC's) assets in KG Block which were sold to ONGC last year, saying the Gujarat government owned company did not provide documents related to the process to fix the valuation to it. GSPC, however, refuted the claim, and said that it had provided all documents sought by the watchdog.

After spending more than Rs23,000 crore for gas exploration and development work, GSPC offloaded its entire 80% stake in Deen Dayal West (DDW) gas field and other discoveries in KG block to ONGC for $1.19 bn or Rs7,738 crore last year. The deal came as a lifesaver for GSPC, whose debts had touched sky-rocketed to more than Rs24,000 crore.

GSPC recorded write off of Rs14,923.54 crore on the KG assets, and loss of a staggering Rs16,303.19 crore for the year 2016-17. The deal had raised several eyebrows, with allegations that the bailout was to hide several years of mismanagement and wrongdoings in GSPC. In a shot in the arm for such critics, the CAG too has raised questions about valuation of the KG assets.

CAG said that since the valuation of the assets was arrived at by the two companies based on the value asisgned by only one particular party, it had sought documents related to due diligence conducted by GSPC to determine true value of the assets. "The company provided some agenda papers related to Board meetings, but other documents evidencing the process adopted for arriving at the valuation were not made available," CAG said in its comments on GSPC's financial statements for 2016-17, on September 22.