A Parliamentary panel on Thursday posed probing questions to top Oil Ministry officials on how they allowed Reliance Industries to violate contract for Krishna-Godavari basin field and why the losses from rise in spending on the gas fields were not quantified.
Oil Secretary G.C. Chaturvedi and head of oil regulator, the Directorate-General of Hydrocarbons S.K. Srivastava appeared before the Public Accounts Committee, headed by Bharatiya Janata Party leader M.M. Joshi, to answer issues raised by CAG audit of RIL’s eastern offshore KG-D6 gas block.
Members sought to know why RIL was allowed to retain the entire exploration area when as per the contract, it was to relinquish 25 per cent of the area after first phase of exploration.
The Comptroller and Auditor General (CAG) in its report tabled in Parliament in September, had criticised the ministry and DGH for allowing RIL to retain the entire KG-D6 block in contravention to the signed Production Sharing Contract (PSC).
Mr. Chaturvedi explained that declaring entire block as discovery area and allowing operators to retain is permissible but sought more time from the Committee to provide details of the pertinent policy.
Members also asked why CAG had not quantified loss to the government from RIL revising capital expenditure in developing KG-D6 field from $2.4 billion proposed in 2004 to $8.8 billion in 2006.
Mr. Chaturvedi is understood to have explained that the ministry did not quantify the losses as it comes under CAG’s domain.
At this some members pointed that losses were quantified in the draft report and the Ministry’s internal auditors should have worked on the issue.
Mr. Joshi is understood to have given the Ministry time till November 30 to reply to a set of questions PAC will send to it.
Some members asked the Ministry representatives as to why no single policy was followed by the Ministry in giving the KG-D6 gas block and the reasons behind frequent change of stand.
On the issue of single point bidding, panel members asked the officials why the CAG was not explained the reason despite the government auditor raising objections on it.
Mr. Chaturvedi is learnt to have said that he would get back to the contractor and inform the committee.
At this, some members questioned the failure of the Oil Ministry in getting facts before deposing before the panel as the report was tabled in Parliament as back as September this year.
A member sought to know the stand of the Ministry on objections raised by the Defence Ministry on carrying out exploration work off the east coast.
Some blocks fall under the missile testing path and others in Naval firing/exercise area, leading to Ministry of Defence objecting to putting up permanent structures there.
The officials were also asked how they plan to deal with the situation in consultation with the Defence Ministry. This issue is not covered by the CAG report.
The audit report does not quantify how much the government lost when Reliance hiked capital expenditure at the nation’s biggest gas field from $2.4 billion proposed in 2004 to $8.8 billion estimate in 2006.
This is perhaps the first CAG report which has gone into a public-private partnership (PPP) contract and some members felt that perhaps this was the reason the auditor did not go into the issue of quantifying the losses.
The CAG had sharply criticised Reliance Industries and the Oil Ministry for violation of contract over the showpiece KG-D6 gas block and called for revamping the current profit-sharing arrangement that reduces government revenues.