Tension over KG gas escalates
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Tension over KG gas escalates

New Delhi: The oil ministry has hit back at Reliance Industries, saying it had not approved the annual spending for the company because the Mukesh Ambani-led firm had denied the CAG access to its books

In the absence of investment approvals, Reliance and its partner, BP Plc, have been warned of a further drop in KG-D6 gas output. RIL executive director P.M.S. Prasad and BP India head Sashi Mukundan met oil minister S. Jaipal Reddy for nearly three-and-a-half hours on Friday to highlight their woes because of his ministry not approving annual budgets and capital spending for three years, sources said.
An oil ministry statement said the Comptroller and Auditor General (CAG), which is carrying out an audit of the spending in the KG-D6 block from 2009-10 to 2011-12, had "recommended withholding of sanctions for annual work plans and budgets if access to records is denied to the CAG". The CAG had submitted an audit of KG-D6 for 2006-07 to 2008-09 to Parliament in September last year and RIL's "denial of access to records to the CAG was adversely commented upon in the previous audit", the statement said.

While the CAG audit report was submitted in September, sources said the oil ministry-controlled block oversight committee had not approved budgets and work programme for 2010-11, 2011-12 and 2012-13. The management committee, which is headed by the director-general of hydrocarbons and includes a senior official of the oil ministry, is to approve spending before the beginning of a fiscal.
Oil ministry sources said Reliance was denying the CAG access to all its records for subsequent audits as it had disputed the scope of audit. RIL says the CAG cannot do a performance audit. 'The representatives of RIL and BP met Reddy on July 13 and represented for speedy clearances in four of the blocks -- NEC25 in the Mahanadi Basin, KG-D6 and two in the Cauvery basin,' the statement said.
RIL-BP at the meeting, which was also attended by oil secretary G.C. Chaturvedi, joint secretary (exploration) Giridhar Aramane and DGH director-general Rajiv Nayan Choubey, said output at KG-D6 would continue to fall in the absence of interventions.

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