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Gave enough time for RIL to respond to audit report: CAG

Official auditor CAG today rejected Reliance Industries' claim that it was not given enough time to respond to observations relating to its KG-D6 gas field.

business Updated: Jul 26, 2011 15:57 IST

Official auditor CAG on Tuesday rejected Reliance Industries' claim that it was not given enough time to respond to observations relating to its KG-D6 gas field.

"We have given Reliance enough time to respond... it (the CAG report) is in the process of being finalised," Comptroller and Auditor General of India Vinod Rai said on the sidelines of a function here.

Rai was responding to a query on Reliance Industries' statement that the time CAG allocated to the company was "far too inadequate" to answer issues raised in the audit report.

According to the CAG's draft report, the Oil Ministry and its technical arm, the DGH, favoured private firms like Reliance and Cairn India by allowing them to retain the entire exploration acreage in their oil and gas blocks, turning a blind eye to increases in capital expenditure and giving additional area in violation of the Production Sharing Contract.

The CAG had said rules were bent, enabling Reliance to retain the entire 7,645-square kilometre KG-D6 block in the Krishna-Godavari Basin, off the East Coast.

Furthermore, the CAG report said the development plan Reliance submitted for Dhirubhai-1 and 3, two of the 18 gas discoveries in the KG-D6 block, was not in compliance with the PSC and the ministry and the DGH turned a blind eye to the company raising capital expenditure without having begun work on the previous plan.

On July 12, the CAG held an Exit Conference with private firms and the Oil Ministry prior to finalising its audit report on Reliance's KG-D6 gas field, Cairn's Rajasthan oil block and BG's Panna-Mukta and Tapti oil and gas fields.

The conference was held as a prelude to finalising its report on KG-D6 fields and taking comments from the companies on its June 7 draft report.

Reliance had in May, 2004, proposed an investment of $2.4 billion for producing 40 million standard cubic metres per day of gas from the D1 and D3 fields.

Later, in October, 2006, it moved an addendum to this, saying $5.2 billion would be required in Phase-1 to produce 80 mmscmd of gas and another $3.3 billion to sustain the peak output for a longer duration.