A senior Left MP on Tuesday said he had alerted Prime Minister Manmohan Singh and the petroleum ministry way back in 2007 to energy companies overstating costs of developing gas fields in state-administered bids, so that they could fetch higher profits.
In what appears to be another scam, the Comptroller and Auditor General (CAG) has revealed this irregularity in a report not yet made public, the HT had reported on Monday.
Communication between Left MP Tapan Sen — who is also member of the standing committee on petroleum — and the PMO shows that Sen wrote to the petroleum ministry and Singh on at least four occasions on these irregularities.
Natural gas is a key energy source for India’s fertilizer and power companies.
Sen said he stumbled upon inconsistencies during routine monitoring.
“From $2 billion (approximately Rs 9,000 crore) for 40 units gas, the stated costs went up to $8 billion (approximately R36,000 crore) for 80 units of gas. So, you had production capacity doubling, but stated costs quadrupling. This was not convincing,” Sen told Hindustant Times.
Sen said since Reliance Industries Ltd (RIL) had offloaded 30% stake in the gas field to British Petroleum at a whopping $7.6 billion(approximately Rs 34,200 crore), he wrote to the PM on Tuesday urging a probe into this deal also.
Sen first complained to the oil ministry in December 2006, saying that RIL seemed to be “gold-plating” costs. He then wrote to the PM on July 4, 2007, urging him to open a probe.
Sen wrote a second time to the PM nine days later, stating: “I urge upon you for an independent enquiry into the complaint of artificial jacking up the capital expenditure by RIL
in its New Field Development Plan (NFDP) for 06 KG Basin and its hasty approval by the concerned authority to find out the actual cost before a final position is taken on the gas pricing.”
Sen said the wrongdoing seemed to have been executed at “the level of the regulatory authority, which is the director-general hydrocarbons”. However, despite cautioning the PMO, an empowered group of minister cleared the overstated pricing, he said.
In a statement issued late on Monday, the oil ministry said it was examining the draft CAG report, received on June 8, and would reply to the audit observations after details from relevant agencies.