As per provisions of various PSCs, the
operators are required to submit Annual work programme & Budgets to the
Management committee for review and approval ( as the case may be). This is an
annual exercise and every contractor is required to submit the Budget as per
various natural heads of costs specified in the Accounting Procedures to the
PSC. It is observed that different PSC operators follow different
practices/formats while submitting the budgets. It is proposed to standardize
the budgeting exercise so as to ensure that all contractor parties of various
PSCs furnish the information in a standardized way so that there is uniformity
amongst all PSC operators. The following identified issues make the standardization
of the budget formats necessary:
Ø The Accounting procedures in the PSC enlist
the reporting of various costs of exploration, drilling and production
activity.
Ø The Chart of Accounts which is approved by
the Government at the start of PSC (within 90 days of the effective date of
PSC) also clearly indicates the classification of various heads against which the costs will be accumulated .
Ø The budgeted cost is adopted as one of the
yardstick for calculating/determining the amount towards un-finished work
programme for purposes of recovering the
cost from contractor. This is also as per the policy approved by ECS for
calculating the amounts towards un-finished work programme.
Ø In addition, Contractor is required to
furnish the Bank Guarantee within 30 days
of the effective date of PSC , equivalent to 35% of the amount of its
participating share of the exploration commitments.
2. In
view of above, it is proposed to standardize the budget formats applicable
during the exploration period. Accordingly, various budget formats have been
drafted reflecting different items of
budgets and their sub-categories. The
contractors of various PSCs are requested to submit their comments and views,
if any, on these draft formats and whether these standardized formats could be
adopted for purposes of submission of the annual budget during the exploration
period. The views, if any, of the contractor parties must reach this ministry
by email at maninder.singh@nic.in
within 3rd June 2008.
(Sunita Sharma)
Under Secretary to Government of India.
Enclosure: Excel file containing various budget formats