With the spectre of another 2G-like scam haunting the Manmohan Singh government, Petroleum and Natural Gas Minister Jaipal Reddy met the Prime Minister on Tuesday and is understood to have discussed the implications of the draft report of the Comptroller and Auditor General (CAG) on the irregularities it has unearthed in the Krishna-Godavari basin gas operations of Reliance Industries Ltd.

The CAG has come down heavily on the working of the Petroleum Ministry as well as the Directorate General of Hydrocarbons (DGH) and their “dubious role'' in giving “undue benefit” to Mukesh Ambani's RIL.

Coming out of the meeting, Mr. Reddy refused to comment but sources said the Petroleum Minister had requested a meeting with the Prime Minister on Monday and was granted the same for Tuesday morning.

Mr. Reddy's meeting with Dr. Singh assumes political significance as the CAG has pointed to a massive but as yet “unquantifiable'' loss to the national exchequer due to the “bending of rules'' to oblige RIL. The company has claimed a capital expenditure (capex) of Rs. 45,000 crore for two phases of the KG-D6 block, a higher figure than it had initially suggested. The CAG noted that the government's financial take will be adversely impacted by increases in capex but, unlike in the case of the 2G scam, it has declined to estimate the losses involved.

On Tuesday, the Bharatiya Janata Party cited the draft CAG findings on KG gas as further evidence of the UPA government's “corruption” but stopped short of asking for a criminal investigation or indeed the head of Murli Deora, who was Oil Minister at the time this “undue benefit” was granted to RIL. Mr. Deora was moved out of the Ministry in January and is currently Corporate Affairs Minister.

Apart from the CAG draft report, both Dr. Singh and Mr. Reddy are understood to have discussed the issue of a hike in the prices of diesel, LPG and kerosene to offset the massive losses being faced by the oil marketing companies. Mr. Reddy is understood to have urged an early decision.

Oil Ministry officials say they are looking into various aspects of the CAG report and would need at least 5 to 6 weeks to submit their reply. Interestingly, the CAG has asked for the Ministry's comments in two weeks. “If the time frame being talked about by the Ministry is correct, the report might not be tabled during the monsoon session of Parliament next month,'' a senior official said.

The role of the then Director General of Hydrocarbons (DGH), V.K. Sibal — criticised by the CAG for his functioning on the KG basin management committee — is already being probed by the CBI. On Tuesday, officials said Mr. Sibal was back in the Ministry in an attempt to explain his position on the KG-D6 approvals. The CAG had charged the DGH with favouring RIL by allowing it to double the KG-D6 gasfield's capital costs.

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