This refers to ‘Let’s do the math’, June 29. It is disturbing that capital expenditure should go up as much as it has, since this affects the government share of profits — it is not just Reliance Industries Ltd (RIL), even Cairn Energy has hiked its capex considerably as compared to its original find. But what needs to be kept in mind is the sharp increase in rig and other costs — rig costs have gone up by almost 350 per cent, steel costs shot up by over 250 per cent, EPC charges by over 110 per cent and labour and other material costs by almost 90 per cent. The per unit cost for RIL’s gas find from the D-6 field is around $5 per barrel oil equivalent — this is around half the global average. So, even with doubling of the capex, the figure will be well within the industry norms. In our industry, the revised costs have to be approved by the management committee. The cost revision goes through the process of audit through independent consultants if the price differential is very high. The checks and balances in the sector are quite robust.
Vatsala Vibhu, Noida
