Reddy slams Joshi's attack on Chidamabram in RIL case

Addressing a press conference, he said his ministry will give "appropriate response" to CAG on issue of alleged favours doled out to private firms like Reliance and Cairn, and will accept with "open mind" any critical comment if it is made in the final report of the nation's top auditor.

Refuting Joshi's allegations that Chidambaram, who was the Finance Minister when price of gas produced from RIL's KG-D6 fields was fixed in 2007, Reddy said the BJP leader who is also the Chairman of PAC, is settling "personal agenda."

"Chidambaram was the member of an empowered group of ministers (EGoM) which fixed the gas price. It was not an individual decision. It was not Chidambaram alone," he said.

"If decisions taken by EGoM is to be critised personally, then there is no shelter for ministers... If this is the way criticism is mounted, it will be difficult to take decisions. Everybody will pass the buck," he said.

Stating the CAG report was only at a draft stage, Reddy said Joshi and Communist Party of India (Marxist) leader Sitaram Yechury were jumping the gun in their criticism.

"It is a draft report. Joshi as PAC Chairman is compromising his own position. It is not very edifying for a senior member like Joshi. The octogenarian politician is hunting for headlines. He should leave the job to younger people in the party and not indulge in this," Reddy said.

Joshi had on Friday attacked the government for alleged favours to RIL and singled out Chidambaram for the critisism, demanding his removal from the Cabinet.

"I know BJP has newfound fondness for the Home Minister but at this rate it will lose its credibility," he said.

Dismissing criticism by Joshi and Yechuri as baseless, Reddy said his ministry will respond to draft report of CAG with an "open mind" in eight weeks time.

"By making this criticism, they are prejudicing the process of objective examination by CAG," he said. CAG after incorporating ministry's comment will table the final report in Parliament after which it will go to PAC. "Why should such a senior member of Parliament be in such a haste."

Reddy said while the draft CAG report does not make any reference to the USD 4.20 per mmBtu price fixed for Reliance's KG-D6 gas, Joshi has brought in "extrenous matter and singled out Chidambaram (for the decision due to) personal agenda."

Rejecting any role in leakage of the draft report of CAG, Reddy challenged Joshi to move privilege notice if he felt the leakage of the report had in any way violated his rights. CAG in its June 8 draft report stated that the oil ministry and its technical arm DGH favoured private firms like Reliance and Cairn India by allowing them to retain entire exploration acreage, turning a blind eye to increase in capital expenditure and giving additional area in violation of Production Sharing Contract (PSC).

Refusing to be drawn into points raised by CAG, Reddy said, "I am confident CAG will look at our reply with an open mind. If in the final report they come out with criticism on some issues, we will also look at them with open mind."

Any observation or recommendation in the final report which is accepted by the government, "will be acted upon and if (there are some which are) not agreed upon, we will not act on them," he said.

"I am not saying that CAG observations are baseless. If (there is) some substance, we should be concerned," he said, while asking everyone to exercise restraint till the final report is out.

CAG examined accounts for 2006-07 and 2008-09 and has not examined accounts of subsequent two years. "They themselves have said in the draft report that they are not in a position to quantify (loss if any to the exchequer)," Reddy said.

"Even CAG has not been able to quantify (the loss) so should we rush in where angels of CAG fear to tread," he asked. He said the CAG report will not have any bearing on the outcome of government approval process for UK's BP Plc buying 30 per cent stake in 23 oil and gas blocks of Reliance Industries including the KG-D6 area, for USD 7.2 billion.

Also, the report will not have any fallout on government decision on permitting London-listed mining group Vedanta Resoruces' takeover of Cairn India. The report, which was submitted to the oil ministry for comments, said that rules were bent enabling Reliance to retain the entire 7,645 square kilometre KG-DWN-98/3 or KG-D6 block in the Krishna Godavari basin off the east coast.

Also, the development plan Reliance submitted for Dhirubhai-1 and 3, two of the 18 gas discoveries in the KG-D6 block, was not in compliance with the PSC and the ministry and DGH turned a blind eye to the company raising capital expenditure without having beginning work on the previous one.

Reliance had in May 2004 proposed investment of USD 2.4 billion for producing 40 million standard cubic meters per day of gas from D1 and D3 fields and later in October 2006 moved an addendum to this saying USD 5.2 billion would be required in Phase-1 to produce 80 mmscmd of gas and another USD 3.3 billion to sustain the peak output for longer duration.

CAG, however, did not say Reliance had overbilled the government or caused loss to the exchequer with increase in development cost.

"The increase in cost from Initial Development Plan (IDP) to Addendum to IDP is likely to have significant adverse impact on Government of India'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 from IDP to AIDP, both overall and in respect of individual line items," CAG said in the draft report.

CAG stated that oil ministry and DGH "irregularly allowed the operator (Reliance) to enter successive exploration phases without the stipulate relinquishment of area, and then allowed the operator to declare the entire contract area as 'discovery area' thus avoiding any relinquishment whatsoever."

On Cairn India-operated Rajasthan oil fields, it said the grant of additional area of 1,708.20 square kilometres beyond the contract area by the government was not in line with the provisions of the PSC, adversely affecting the sacrosanct nature of the contract area and its phased relinquishment.