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Oil Min, DGH favoured RIL in KG-D6


Oil Min, DGH favoured RIL in KG-D6
The premier auditor of the country, CAG, has stated in its report that the oil ministry and DGH, its technical arm, have bent rules for the company Reliance Industries (RIL). Although it fell short of stating that Mukesh Ambani controlled firm over billed the government on its KG D-6 gas fields which impacted the government revenues, according to reports in the media.

Apparently in the draft audit report on KG-D6, the Directorate General of Hydrocarbons (DGH) allowed Reliance Industries to hike capital expenditure by 117% for developing gas finds in the block.


According to the draft the increase in cost was from USD 2.39 billion in the initial development plan to USD 5.196 billion. Although the CAG in its draft report to the oil ministry has not made any comments on the reasonableness, or otherwise increase in cost.

The rule as of now allows Reliance to recover all capital cost that was spent on developing the field from revenues earned from the sale of oil or gas. After the recovery the profits are split between the between the stakeholders, that includes the government.

After the Anil Ambani group levied charges on of inflating the cost of development of gas fields, the CAG was asked to audit the accounts of Reliance.

After incorporating comments from Oil Ministry the report will be tabled in Parliament. The report said also stated that Reliance did not initiate the process of coming out with tender for equipment lease as per the original plan.

The report has also said that the ministry and DGH allowed Reliance to enter successive exploration phases without the stipulated relinquishment of area and then allowed it to declare the entire contract area as "discovery area".

OneIndia Money

Read more about: ril reliance dgh commodities
Story first published: Monday, June 13, 2011, 15:54 [IST]
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