CAG indicts Gujarat govt

The Comptroller and Auditor General (CAG) has blamed the Gujarat government for favouring and providing undue benefits to big corporate houses like Reliance Industries and Adani Energy.

The CAG tabled its report in the Vidhan Sabha on Friday. The favours cost the state Rs 5,000 crore, according to the CAG.

The report pointed out that Gujarat State Petroleum Corporation (GSPC) owned by the state sold gas to the companies at rates below its cost price. The report said GSPC bought natural gas from the open market and sold it to the Adanis at a price lower than the purchase price. The CAG estimated that Adani Energy received undue benefits of Rs 70.54 crore in the process.

The firm passed on undue benefit of Rs 12.02 crore to Essar Steel Ltd by way of waiver of capacity charges contrary to the provision of gas transmission agreement. The CAG was severely critical of GSPC's operations in the Krishna Godavari basin gas block where improper assessment of technical and financial issues led to drilling cost shooting up to $1.302 billion as against the estimate of $102.23 million.

"The bidding process adopted by the company for acquisition of hydrocarbon block was found to be defective as in the case of KG block. The bids of the company ignored the actual cost involved, which exposed the company against high risk in exploration activities," CAG report stated. The main reasons for the incorrect estimation, CAG said, was adoption of deficient geological model prepared by its joint venture partner, Geo Global Resources of Canada, which led to escalation in the cost of exploration phase from Rs 531.94 crore to Rs 6,265.68 crore.

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