Reliance Industries Ltd (RIL) on Friday told the Public Accounts Committee (PAC) that it was not given ‘fair' opportunity by the Comptroller and Auditor General of India (CAG) to explain its points regarding alleged contract violations in the KG-D6 gas block. It also asserted that the CAG's observations were on technical issues and not accounting.
Deposing before the PAC, top RIL officials said the CAG's draft report that was submitted in June, 2011, ‘purported' to be a performance audit, which as ‘not provided for' in the production-sharing contract (PSC). They also said the performance audit was best carried out by technical experts with knowledge of deep water operations. Moreover, the CAG teams went for a field audit without seeking or examining the relevant records.
Led by Group President V. Balasubramanian and Executive Director P. M. S. Prasad, the RIL officials said their request to interact with technical experts deputed by the CAG for audit was also rejected by the government auditor.
On the issue of retention of contract area, the RIL officials told the PAC members that the determination of a discovery area is a technical matter left under the PSC to the technical judgment of the operator. It is learnt that the RIL has invited PAC members for an on-the-spot study of the KG-D6 block.
Notably, the CAG report had found shortcomings in the functioning of the Minister of Oil and Natural Gas and its technical arm -- Directorate General of Hydrocarbons (DGH) — for allowing RIL to retain the entire 7,645 sq km KG-DWN-98/3 (KG-D6) block in the Bay of Bengal after the Dhirubhai-1 and 3 gas finds were made in 2001.
The RIL officials claimed that the CAG has not given any technical basis to justify its observation.
The PAC has sought more documents from Reliance on cost escalation. The CAG had said “most procurement activities were undertaken late in the line with the schedules of the Initial Development Plan of May 2004.
By contrast, activities in respect of items in the Addendum to the IDP (AIDP) were initiated even before the submission/approval of the AIDP. Clearly, the development activities of the operator were guided by AIDP, rather than IDP.”
