Oil ministry, RIL nexus exposed

Oil ministry, RIL nexus exposed

Draft CAG report finds that officials favoured three firms

The report accuses the oil ministry for allowing “irregularities and bending rules” to “oblige”  Mukesh Ambani's Reliance Industries Limited(RIL) in the Krishna Godavari basin gas fields, leading to a massive and as yet “unquantifiable” loss to the national exchequer. Reportedly, the CAG has exposed the “close nexus” between RIL and the “bureaucrats” working in the Petroleum Ministry as well as DGH.

The draft report of CAG, which is  awaiting the oil ministry’s response, said the RIL was allowed by the ministry and DGH to violate its terms of contract with the government for its showcase Andhra offshore fields and increase its capital expenditure plan to start production from India's biggest gas discovery in the recent years.

The draft report has also rapped the ministry for showing favours and going out of its way to grant over 856 sq km of additional area to Cairn India adjacent to its oil discovery in Rajasthan block.

The CAG in its draft audit report on KG-D6 block said the ministry and the DGH also bent the rules to grant “huge benefits” to Reliance when it was allowed to retain the entire block, but said gains cannot be quantified. “The increase in (Phase-1) cost from $2.39 billion proposed in the Initial Development Plan of May 2004 to $5.196 billion in the addendum to the Initial Development Plan is likely to have a significant impact on the government’s financial take.

 However, at this stage, based on the information provided, we are unable to comment on the reasonableness, or otherwise of the increase in cost, both overall and in respect of individual line items,” the CAG stated.

The Andhra offshore and the Barmer fields in Rajasthan are among eight acreages, which are operated either in public-private partnership or by private companies that were put under CAG eyes in 2007.

The special CAG audit was ordered after Samajwadi Party and ADAG group of Anil Ambani alleged “goldplating’ (artificially jacking up costs) by Mukesh Ambani’s RIL.

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