Subsidiaries, JVs of all PSU oil firms to come under CVC watch

Nov 21 2013, 08:24 IST
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SummaryOil ministry issues guidelines for setting up vigilance administration.

Joint ventures and subsidiaries of state-run oil and gas companies enjoying a field day in business transactions are being put under the watchful eye of the Central Vigilance Commission following numerous complaints against their working and award of contracts.

On the advice of the CVC, the petroleum ministry on Tuesday issued guidelines for setting up a vigilance administration in all joint ventures, special purpose vehicles and autonomous organisations of oil and gas PSUs that were earlier free of such scrutiny.

All such vigilance cells would “function under the purview of the ministry” which, in turn, would submit the findings to the CVC for a further probe.

Under the new rules, even joint ventures with private sector character — where combined PSU holding is between 26 per cent and 50 per cent — would have to set up “a vigilance mechanism”. However, the modality of the outfit and its trials would be decided by the JV’s board of directors.

The norms would also apply to JVs and subsidiaries registered in a foreign country provided that the vigilance cell is constituted in a manner that is “not contradictory to the provisions under which the company is registered or the laws of the host country”.

The guidelines, specific to different levels of equity contribution by PSUs, would take into account the percentage share of the paid up capital and “not the intended equity holding” in the joint venture.

The ministry’s guidelines come more than three years after the Central Vigilance Commissioner in May 2010 pointed out the need for “a vigilance coverage and an oversight mechanism” to check corruption in such outfits that had mushroomed in the oil and gas sector to escape scrutiny.

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