On slippery wicket

On slippery wicket

As the UPA government at the Centre is grappling with several corruption charges against its ministers and senior officials with allegations of causing huge losses to the exchequer, one more accusation has now sprang up involving the Petroleum and Natural Gas (PNG) ministry. The office of Comptroller and Auditor General (CAG), that scrutinises and reports on whether the government’s interests have been maximised and protected in all its dealings, has recently pointed out that the PNG ministry and its senior officials, in a close nexus with some large private oil and gas explorers, have caused huge financial losses to the government.

CAG, according to reports, has pointed out that Reliance Industries Ltd (RIL) has shown a massively inflated capital expenditure for the development of the oil exploration block KG-D6, from $2.4 billion to $ 8.8 billion. While the company did not take any prior approval from the PNG ministry for the same, the ministry and the Director General of Hydrocarbons did not question the reason for quadrupling the cost. As the cost of production went up and profits dropped, this, according to CAG, has led to large losses to the exchequer because the production sharing contract allows only ‘surplus’ to be shared in a pre-determined proportion. Though the CAG could not quantify the loss, it estimated the figure to be huge. In another allegation, CAG said that RIL neither initiated proper exploration work in a vast area of the Krishna-Godavari (KG) basin awarded to it, nor relinquished its rights, causing loss of revenue to the government.

CAG has hinted that the then petroleum and natural gas minister Murli Deora, though it did not name him, was at the helm of PNG when the irregularities in government policies happened. In fact, Deora who was very close to Mukesh Ambani of Reliance Industries was also accused of favouring Mukesh in the gas pricing dispute case between the two Ambani brothers. Though a Reliance official has denied any wrong doing and insisted that the company strictly complied with the government rules, knowing the Ambani group’s proximity to powerful bureaucrats and its ability to influence government policies, a thorough investigation is required. The government should also quantify the possible loss caused due to violation of norms and recover the same from the erring companies.

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