The Comptroller and Auditor General of India (CAG) on Friday said $970 million (or around Rs 5,900 crore) of expenditure incurred by Reliance Industries Ltd (RIL) in its KG-D6 gas block off the coast of Andhra Pradesh should be disallowed.
In a report that was tabled in Parliament on Friday, the CAG has also pulled up the petroleum ministry for not being able to take timely decisions and delays in according approvals to RIL for developing the KG-D6 field.
"Petroleum ministry and the director general of hydrocarbons (DGH) are responsible for scrutinising development plans prior to their approval... CAG has noticed that there was uncertainty in the recoverable gas reserve estimates and substantial changes were made to it after the approval of development plan... this raises questions on the process of examination, consideration and acceptance of gas estimates by the DGH," CAG noted in its report.
"Our attention has been drawn to the CAG Report tabled today in the Parliament. There are obvious differences between the CAG and RIL on certain basic issues concerning the Production Sharing Contract (PSC). Once we receive a formal communication of audit exceptions by the government, we will respond to the government in accordance with the provisions of the accounting procedure under the PSC and also exercise such other rights as are available to us in law," RIL spokesperson said.
In addition to the deficiencies of $690.7 million, CAG report said that an expenditure of $160.81 million incurred by RIL in KG-D6 block has also been found as "not eligible for cost recovery" by the petroleum ministry.
The CAG has further pointed out irregularities where RIL was "improperly allowed to do further exploration... these activities were not in line with PSC provisions."