Ambani meets PM on CAG report

Ambani meets PM on CAG report

Separately, RIL wrote to the oil ministry requesting for a copy of the draft report of Comptroller & Auditor General (CAG), after which the relevant portions of the draft CAG report were provided to the company, sources said.

RIL, earlier this week, had written to the ministry saying that the  reported comments from the leaked report reflected a “complete misunderstanding of legal and contractual issues” and hurt its reputation.

Officials in the Prime Minister’s Office (PMO) said the meeting between Singh and Ambani happened around noon.

Ambani, however, did not seek any meeting with Oil Minister S Jaipal Reddy who had earlier this week stated that his ministry will approach the draft report of the nation’s top auditor with an “open mind” and give its response within eight weeks.

“While the actual contents are not available to us, from media reports doing the rounds, it is extremely disheartening to note that there is complete and basic misunderstanding of legal and contractual issues which we presumed had been sufficiently clarified in our responses," RIL said requesting a copy of the draft CAG report.

CAG in its June 8 draft report stated that the ministry and its technical arm Directorate General of Hydrocarbons (DGH) favoured RIL allowing it to retain the entire 7645 square kilomter KG-DWN-98/3 or KG-D6 block in the Krishna Godavari basin off the east coast.

Development plan

Also, the development plan RIL 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 blind eye to the company raising capital spending without having begun work on the previous one expenditure plan. CAG, however, did not say Reliance had over billed the government or caused loss to the exchequer with 114 per cent increase in development cost to $5.2 billion.

RIL had in May 2004 proposed investment of US$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 US$5.2 billion would be required in Phase-1 to produce 80 mmscmd of gas and another US$3.3 billion to sustain the peak output for longer duration.

“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 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.

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