RIL, DGH meet CAG officials over KG-D6 basin matter

FOR IMMEDIATE RELEASE
Mumbai, Maharashtra, India, Republic of (Free-Press-Release.com) July 13, 2011 -- Representatives from the Reliance Industries Limited (RIL), led by its executive director PMS Prasad, along with Directorate General of Hydrocarbons (DGH) and oil ministry officials, met with the Comptroller and Audit General (CAG) body in the exit conference held on Tuesday. This conference was held to review and discuss on the audit report submitted by CAG that targeted Reliance Industries’ much acclaimed KG D6 basin and suggested irregularities in its capital expenditures.

In reply to the audit draft that allegedly stated violation of government mandate, RIL has stood its ground and stated that CAG’s review was ‘erroneous’ and it could not warrant the suggested gold-plating of cost in violation of the production sharing contracts (PSC). RIL noted that CAG should have paid heed to evaluating ‘authenticity’ of expenses as against judging the ‘reasonableness’ of the same. Oil ministry has also stepped up in support of Reliance stating that it has supported the larger purpose of prolific exploration of oil and gas blocks through private partners, instead of favoring one or two partners as CAG has pointed out. DGH also responded to CAG by stating that it had not done anything against the mandate of the PSC and that it will take ‘appropriate remedial actions’ against its partners if any unjustified cost surfaces. It made clear that no exploration was sanctioned post the expiration of exploration period proposed by an operator and hence there was no scope for backdoor exploration
CAG had red marked oil ministry for allowing Reliance Industries to raise capital expenditure in its KG D6 block. In defense, Reliance Industries pointed out that the KG-D6 is one of India’s most cost effective and time derivative projects when compared with other similar global projects.
Although CAG claimed that government had incurred significant loses because of private players, it failed to acknowledge that the central government, earlier this March, has earned Rs 7,000 crore as royalty and Rs 32,000 crore as profit petroleum without having made any financial investment.

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