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Reddy meets PM amid RIL's KG-D6 controversy

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Press Trust Of India New Delhi
Last Updated : Jan 20 2013 | 10:13 PM IST

With the Comptroller and Auditor, General (CAG) severely criticising the oil ministry’s role in approving Reliance Industries’ KG-D6 field cost, petroleum minister S Jaipal Reddy on Tuesday met Prime Minister Manmohan Singh to probably tell him briefly about his ministry response.

While Reddy refused to comment on his 15-minute meeting with the Prime Minister this morning, sources in his ministry said the meeting was fixed, much before the CAG report on June 8.

The ministry, they said, will take at least 5-6 weeks to reply to points raised by CAG which Reddy may have told the Prime Minister. CAG had asked for comments in two weeks time.

The delay in the ministry’s reply may mean the CAG final report would not be tabled in Parliament in the monsoon session next month.

Sources said the ministry is taking a longer time as it has an entirely new set of officials. The decision on KG-D6 were taken when Murli Deora was the minister and V K Sibal was the head of the ministry’s technical arm, Directorate General of Hydrocarbons.

Incidentally, Sibal too was in the ministry on Tuesday probably to explain to the new oil secretary, G C Chaturvedi, and his team about his role in KG-D6 approvals.

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CAG in its draft report had rapped the oil ministry and its technical arm, DGH, for allegedly favouring Reliance by allowing it to double KG-D6 gas field’s cost but it stopped short of saying if the Mukesh Ambani firm had overbilled the government and thereby caused loss to the state exchequer. It also pulled up the ministry for going out of its way to grant 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 DGH also bent the rules to grant “huge benefits” to Reliance when it was allowed to retain the entire block, but said the gains cannot be quantified.

“The increase in (Phase-1) cost from (USD 2.39 billion proposed in the) Initial Development Plan (of May 2004) to (USD 5.196 billion) in the addendum to the Initial Development Plan is likely to have a significant impact on the 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, both overall and in respect of individual line items,” CAG said.

Reliance, however, said that “as a responsible operator, it has fully complied with the requirements in the Production Sharing Contract (PSC) at all times in conducting petroleum operations, and refutes any suggestion to the contrary”.

“The KG-D6 project.. Has been globally acclaimed for its cost effective, speedy, flawless execution and smooth commissioning,” Reliance said in a statement yesterday. RIL had raised the cost of bringing to production India’s first deep-sea and the largest gas field after reserves almost doubled to 11.3 trillion cubic feet, raising the peak output two times to 80 million cubic meters per day.

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First Published: Jun 15 2011 | 12:43 AM IST

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