Oil Ministry to make functioning of Directorate General of Hydrocarbon more Transparent

The oil ministry accepted an Ashok Chawla Committee's recommendation to make functioning of the Directorate General of Hydrocarbon (DGH) more transparent to prevent corruption charges. The ministry however firmly rejected the panel’s suggestion to transfer the government's regulatory powers to an independent body. The ministry did not approve of the panel's demand to carve out DGH's regulatory functions into an independent regulator.

The ministry also decided to accept the panel’s recommendation to adopt disclosure norms related to investment audits and post-bid monitoring in tune with the best practices existing elsewhere in the world.

The regulatory and contract management roles of the DGH are under scrutiny amid allegations that it did not safeguard the government's interests while dealing with private energy firms - such as Cairn India, Reliance Industries, and BG. The Comptroller & Auditor General had criticised the DGH's role in its draft report and the CBI registered a case against the former head of DGH, VK Sibal and six others officials of the directorate.

The Chawla Committee was constituted to consider measures for tackling corruption in allocation of natural resources after the 2G spectrum scam broke out. 

The Committee had suggested reconstituting the Directorate into a technical office for contract management under the oil ministry and setting up a separate independent upstream regulator to perform regulatory functions.  It was however argued that the DGH does not fix prices and hence its independence from the government was unwarranted. DGH is inseparable from the oil ministry as it manages hundreds of contracts on behalf of the government. Technical regulation of oil and gas blocks is always with the government in all developed nations without any exception.

The issue of segregating the DGH's role and entrust its regulatory functions to an independent regulator surfaced in the past as well. The Naresh Narad Committee in 2001 suggested creation of Upstream Hydrocarbon Regulatory Board (UHRB) to regulate country's upstream activities. UHRB could not be implemented amid stiff resistance by the then director general of the Directorate.